IFRS 9 requires that on initial recognition financial liabilities must be measured at:
A) fair value;
B) fair value minus transaction costs;
C) fair value plus transaction costs;
D) discounted future net cash flows.

Question

Quizplus · Accepted Answer

IFRS 9 requires that on initial recognition, financial liabilities should be measured at fair value minus transaction costs. This is because transaction costs are directly attributable to the issuance of a financial liability and impact the amount of resources the issuer would need to be compensated for to transfer the liability to a new holder. Therefore, transaction costs incurred in the issuance of a financial liability reduce the amount of the liability that the issuer initially recognizes as the fair value.

IFRS 9 Requires That on Initial Recognition Financial Liabilities Must