CERTYNEX IFRS ACADEMY

Kelp SA, which has no lease liabilities (case fact), omits the disclosure of an instrument's fair value only if its carrying amount is a reasonable approximation of it (IFRS 7, para. 29). A working file applies this rule to Kelp's instruments. Which of its conclusions is wrong?

For a trade receivable due in twenty days, management may conclude, by professional judgement, that the carrying amount reasonably approximates fair value.

Before omitting the fair value of an instrument, management assesses whether the carrying amount of that instrument is a reasonable approximation of it.

A ten-year fixed-rate loan measured at amortised cost is exempt from fair value disclosure, since its amortised cost takes its place.

An amortised cost is not equal to fair value by nature and may differ significantly from it for a long-term instrument.