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Hi sir
according to conceptual framework measurement criteria
“Conversely, the Framework suggests that fair value may not be relevant if items are held solely for use or to collect contractual cash flows. Alongside this, the Framework specifically mentions items used in a combination to generate cash flows by producing goods or services to customers.”
as per page 62 of OT notes
we subsequently measure debt instrument at FVTPL
“The financial asset may still be measured using fair value through profit or loss, even if both tests are satisfied, if it eliminates an inconsistency in measurements (fair value option).”
isn’t that conflict with the framework?
Question one
OT notes states that
“Note: The financial asset may still be measured using fair value through profit or loss, even if both tests
are satisfied, if it eliminates an inconsistency in measurements (fair value option)”What does inconsistency means?
Question 2
Technical article of ACCA only mention this in respect of liabilities but not in respect of assets.
Article states that
“IFRS 9 also retains the option for some liabilities, which would normally be measured at amortised cost to be measured at FVTPL if, in doing so, it eliminates or reduces an accounting mismatch, sometimes referred to as ‘the fair value option’. Where this is the case, to the extent that part of the change in fair value of the financial liability is due to a change in the entity’s own credit risk, this should be taken to other comprehensive income in the year, with the balance of any change in fair value taken to profit or loss. If this accounting treatment for the credit risk creates or enlarges an accounting mismatch in profit or loss then the gain or loss relating to credit risk should also be taken to profit or loss.”
is there any change which is missed in the technical article?
Hi Sir
Change in classification from amortised cost to FVTPL will be change in estimate under IAS 8?
(Please try and put each question in a separate thread)
Q1I have never seen an example re financial asset – but an example would be if there was a matching liability that had to be measured at FV
Q2 Don’t understand your question – please rephraseChange from AC to FV – effectively treated as change in estimate – difference in CA goes to P&L
Hi Sir
Apologies for putting questions in one thread.
Thanks for replying, regarding question 2 i read the technical article again and there is no inconsistency between notes and technical article. thank you so much.
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