You are a consultant at KAP XYZ who are currently assigned to help with PSAK 71 or IFRS 9 implementation project at Bank Independent. You picked four assets from among the bank's financial assets with the following characteristics:

1. The bank has a loan receivable denominated in IDR to PT Sukses, with a floating interest rate pegged to JIBOR (Jakarta Interbank Offering Rate) as benchmark rate with a 2% margin p.a. and principal of Rp 500 million. The loan will mature in one years.

2. The bank owns a bond receivable denominated in EUR to PT Maju with a fixed interest rate of 10.5% and principal amounting to Rp 3.000 million. This will reach maturity in two years.

3. The bank has bond receivable from PT Bahagia which is actively traded on bonds exchange. The bond has interest rate of 7% p.a., Rp 3.000 million nominal value, and maturity of five years.

4. The bank owns a convertible bond from PT Damai with a two-year tenure and 11% coupon p.a. In the maturity date, the bond would be converted to 2.000.000 shares of PT Damai, each valued at Rp2.000.

You were also informed that the financial assets were under the custody of three separate divisions, each having distinct intents:

1. The receivable (1) is managed by the Commercial Banking Division. The division lends money to corporations and monitors its debtors so that they can pay the principals and interests as defined in the debt covenant.

2. The bond (2) is managed by Treasury Division whose intent is to ensure that the bank's level of liquidity complies with regulator's directive. The division does not always conduct sales of its bills. Sometimes, when liquidity is in a tight condition, the bills may be held to maturity. When historical data are consulted, the bills' nominal values sold before maturity equal, in most cases, the nominal values of bills held to maturity.

3. The bonds (3) and (4) are managed by the Market Division whose objective is to earn shortterm gains from trading activities. The manager of the division also earns bonus, which is aligned to the capital gain booked by the division.

Required:

1. Explain the result of SPPI test for the four financial assets owned by Bank Independent. 2. Explain the result of business model test for the three divisions of Bank Independent.

3. Give your conclusion on how should the financial assets above be measured subsequently.