CERTYNEX IFRS ACADEMY

A bank acquires a loan for 960; the applicable standard requires fair value at initial recognition, which comes out at 1,000 by discounting based only on observable market data (case data). In that case, the applicable standard calls for no different treatment of the difference of 40 (case data). What treatment does it adopt?

It adds 40 to the transaction price and takes the instrument to 1,000 directly in equity.

It recognises the difference of 40 in profit or loss, no other standard providing a different treatment.

It ignores the difference and keeps the transaction price of 960 as the initial fair value.

It applies IFRS 13 to defer the difference over the life of the loan, whatever the loan's standard.