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Debt instruments (other than those wholly repayable or receivable within one year), including
loans and other accounts receivable and payable, are initially measured at present value of the
future cash flows and subsequently at amortised cost using the effective interest method. Debt
instruments that are payable or receivable within one year, typically trade debtors and creditors,
are measured, initially and subsequently, at the undiscounted amount of the cash or other
consideration expected to be paid or received. However, if the arrangements of a short-term
instrument constitute a financing 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 the case of
an out-right short-term loan not at market rate, the financial asset or liability is measured, initially,
at the present value of the future cash flow discounted at a market rate of interest for a similar
debt instrument and subsequently at amortised cost.
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