Which measurement basis is typically used for subsequent measurement of financial assets?

The measurement basis typically used for the subsequent measurement of financial assets is amortised cost. This method is primarily applied to financial assets that are held with the objective of collecting contractual cash flows, such as loans and receivables. Under amortised cost, the asset is recorded at its initial recognition amount adjusted for any principal repayments, minus any impairment losses, and adjusted for any effective interest over the life of the asset. This approach provides a practical and systematic way to allocate interest income while reflecting the ongoing performance of the asset over time.

Amortised cost is particularly relevant for assets that will not be sold in the near term and where the cash flows can be accurately estimated. This contrasts with other measurement bases, which are used in different contexts. For example, fair value would be more appropriate for financial assets that are held for trading or that are designated at fair value through profit or loss, as it reflects current market conditions. Historical cost is generally used for non-financial assets, and revalued amount is applicable when certain assets are revalued periodically but is not standard for financial assets primarily valued for cash flow collection.