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Debt instruments like loans and other accounts receivable and payable are initially measured at
present value of the future payments and subsequently at amortised cost using the effective interest
method. Debt instruments that are payable or receivable within one year, typically trade payables or
receivables, are measured, initially and subsequently, at the undiscounted amount amount of the
cash or other consideration expected to be paid or received. However if the arrangement of a
short-term instrument constitute a financial transaction, like the payment of a trade debt deferred
beyond normal business terms or financed at a rate of interest that is not a market rate or in case of
an outright short-term loan not at market rate, the financial asset or liability is measured, initially and
subsequently, at the present value of the future payments discounted at a market rate of interest for a
similar debt instrument.
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