CERTYNEX IFRS ACADEMY

Rhône SA acquires bonds that would be measured at amortised cost. It funds them with a borrowing measured at fair value through profit or loss, which would create an accounting mismatch. Which course of action is possible for the bonds?

It must designate them at FVTPL, the designation being compulsory when an accounting mismatch exists.

At the reporting date, after measuring the profit or loss difference, designate them at FVTPL, then return to amortised cost if the difference disappears.

At initial recognition, irrevocably designate them at FVTPL if this significantly reduces the mismatch.

Designate them at FVOCI to offset the mismatch.