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Financial liabilities which are normally measured at amortised cost can be measured at FVTPL if it would eliminate or reduce an accounting mismatch. In this case any movement in fair value is split into two components as follows:
1. Fair value change due to own credit risk, which is presented in OCI and
2. The remaining fair value which is presented in P/L.My question is: Can the fair value movement due to credit risk be recycled?
Thank you.
Hi,
No, the credit risk through OCI cannot be recycled through profit or loss but it can be transferred through equity, think reserve transfers.
Don’t get too caught out by very technical aspects like this throughout your studies as it will make life very tough indeed, good questions though!
Thanks
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