One of the issues covered by IFRS 9 Financial Instruments (revised July 2014) is the classification and measurement of financial assets. The three possible measurement bases identified by the standard are:
 – Amortised cost.
 – Fair value through other comprehensive income.
 – Fair value through profit or loss.

Required:
Explain how IFRS 9 requires entities to select the appropriate measurement basis for a financial asset. You should include any options available to entities regarding classification in your explanation.

Note: You are NOT required to define a financial asset. (7 marks)