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As per IFRS 9: It is also possible to measure a liability at fair value when it would normally be
measured at amortized cost if it would eliminate or reduce an accounting.
mismatch.I would like to know about the accounting mismatch.
An example would be appreciated.
Company borrows money to buy investment property (IP).
IP normally measured at FV with gains / losses in P&L.
So it makes sense to also measure FL at FV with gains / losses in P&L.
Why? FV of FL and FV of IP are both partly dependant on market interest rates.
So…………………….matching.
Good question.
🙂
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