CERTYNEX IFRS ACADEMY

Pelsa SA issues a loan whose rate is indexed to an index. It holds assets measured at fair value through profit or loss (FVTPL) whose fair value changes largely offset those of the debt. Measured at amortised cost, the debt would create an accounting mismatch. Nu is considering designating the debt at FVTPL. Which analysis is consistent with IFRS 9?

The designation is possible at a later reporting date, when the mismatch appears in the accounts of the entity.

It is possible at initial recognition, because it significantly reduces the mismatch; it is irrevocable.

The designation is not possible, because a financial liability is measured at amortised cost.

The designation is possible at initial recognition, but Nu will be able to cancel it if the mismatch disappears later.