CERTYNEX IFRS ACADEMY

Thalès SA has issued a hybrid contract whose host is not a financial asset. It contains a prepayment option exercisable at an amount close to amortised cost. Thalès considers designating the whole hybrid contract at FVTPL. What can be said of this designation option?

It is not available: the prohibition on separating is clear for a prepayment option at an amount close to amortised cost.

It is available, because the host is not a financial asset.

It is not available, because designation at FVTPL concerns financial assets and not hybrid contracts.

It is available, but the designation can be revoked if the derivative becomes significant.