Own credit risk of a designated liability

Learning objectives

• Split the change in fair value of a designated liability between the portion attributable to changes in own credit risk (OCI, not recycled) and the remainder (profit or loss), unless this would create an accounting mismatch.L3
• Record the journal entries for own credit risk in other comprehensive income and measure their effect on the financial position, profit or loss and other comprehensive income.L3

Normative references

• IFRS 9 §5.7.7For a financial liability designated at FVTPL in accordance with para. 4.2.2 or 4.3.5, the portion of the change in fair value attributable to changes in its credit risk is presented in other comprehensive income and the remainder in profit or loss, unless that presentation would create or enlarge an accounting mismatch in profit or loss (para. 5.7.8). Amounts presented in OCI are not subsequently transferred to profit or loss, although a transfer within equity is permitted (para. B5.7.9).
• IFRS 9 §5.7.8Exception: if presenting in OCI the change attributable to own credit risk would create or enlarge an accounting mismatch in profit or loss, the entire change in the fair value of the liability is presented in profit or loss.

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

2 questions

• Éta SA has designated a borrowing at FVTPL. Over the year, the fair value change of the liability is {total_fair_value_change}, of which {own_credit_change} is attributable to the change in own credit risk (case datum). No accounting mismatch results from the presentation in OCI. Calculate the part of the change presented in profit or loss and the part presented in OCI.L3
• Ypsilon SA has designated a borrowing at FVTPL. At the reporting date, the fair value of the liability increases by {total_fair_value_change}, of which {own_credit_change} is attributable to the change in own credit risk (case datum). No accounting mismatch results from the presentation in OCI. Record the remeasurement entry.L3