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Hello,
The IFRS 9 standard says, that on recognition, if the instrument meets the criteria for measurement at amortised cost or FVTOCI, but to avoid – “accounting mismatch / inconsistency”, the financial asset can be measured at FVTPL, initially.
My question is, what are these “Inconsistencies/ accounting mismatch”?. Please give some examples of the same
Hi,
Is this not covered in the notes and videos? It is to ensure that two similar opposite instruments with similar characteristics are measured in the same fashion.
Thanks
Which video? Not any clearer from the study notes. Could you provide some examples?
If u got a loan to buy non current asset.. Then u decide that property u bought should be valued at fair value but the loan u got. U are using amortised cost method. Now we have a mismatch.
Hence both ur property needs to be at fair value and also the loan be carried at fair value.
Hi,
It is commonly seen in the banking industry, whereby if you have an investment in debt that is held at amortised cost and a similar financial liability at fair value, then the investment can be designated as at fair value too so that the treatment for the similar financial instruments is the same.
Thanks
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