IFRS 9

No. FA = equity investment in another company or contractual right to receive cash. DT is just an accounting adjustment.

Okay.. thank you, tutor.

:)

Measurement of financial liabilities Where a company has a financial liability that is measured at FVTPL, the fair value of the liability can depend on the credit worthiness of the company. As a result, where the credit worthiness of a company deteriorates the fair value of the liability will typically reduce, resulting in a fair value gain. ( HOW? ) What's the rationale behind this? And where the credit worthiness of a company improves the fair value of the liability will typically increase, resulting in a fair value loss( HOW? )! MY QUESTION IS: Teacher, I don't get this. How does a worse credit worthiness reduces the fair value of the bonds, and instead of recording it as a a low in demand bond in the market - as a loss. we are recording it as a GAIN in the OCI. and Vice versa.

If the bond was an ASSET we would agree that there would be a LOSS due to bad credit worthiness. Dr P&L Cr Financial asset So, in theory, if the bond is a LIABILITY, there will be a GAIN due to bad creditworthiness. I owe you $500. I am a bad credit person. I am only likely to be able to give you $200. Dr Financial liability 300 Cr OCI 300 (crediting P&L would be going too far!) Crazy? Yes a bit. :)