IFRS 9, Fair value option.

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August 12, 2023 at 11:53 am #689786
akka17bakka
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Hello Tutor,

One of the kit question says,

“Ethan argued that there is a specific financial correlation between the factors, such as interest rates, that form the basis for determining the fair value of both Ethan’s investment properties and the related debt.”

Could you kindly explain this statement?

Thank you.
August 12, 2023 at 5:17 pm #689796
Stephen Widberg
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Changes in interest rates will change both the fair value of real estate and the fair value of debt.

So it makes sense to value both at FV, instead of leaving the debt at amortised cost.
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