The day-one difference

Learning objectives

• Determine the treatment of the initial difference by reference to the Standard applicable to the item, since IFRS 13 alone does not prescribe it.L4

Normative references

• IFRS 13 §60If fair value is required at initial recognition and differs from the transaction price, the difference is recognised in profit or loss unless another Standard specifies otherwise.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

7 questions

• The Brélane fund acquires a financial instrument for {price_paid} in cash. The fair value at the acquisition date, from a technique based on observable inputs, is {fair_value}. Fair value is required at initial recognition and no provision of another standard requires the difference to be deferred (case data). Record the acquisition entry.L3
• If fair value is required at initial recognition and differs from the transaction price, what does IFRS 13 provide for the difference?L4
• Which statements about the day-one difference (fair value − transaction price) are correct? (Several answers.)L4
• Moldrane bank acquires a security for {price_paid}. Its fair value at the acquisition date is {fair_value}, required at initial recognition. No provision of another standard requires the difference to be deferred (case data). Compute the day-one gain recognised in profit or loss and the initial carrying amount of the security.L4
• In his closing file, an accountant writes: "IFRS 13 requires the day-one difference to be deferred in a liability and released to profit or loss over the life of the instrument." What is the error?L4
• Quenlane bank acquires an instrument for {price_paid} in cash. Its fair value at the acquisition date is {fair_value}. Case data: the standard applicable to the instrument requires the day-one difference to be deferred, because fair value rests on unobservable inputs. Record the acquisition entry.L4
• Rivelane bank acquires a portfolio of receivables for 970,000; its fair value, required at initial recognition, is 1,000,000 under a technique based on unobservable inputs. To decide the treatment of the 30,000 difference, what must the bank rely on?L4