How should non-current financial liabilities be recorded initially?
A)At face value.
B)At fair value.
C)At fair value less transactions costs.
D)At face value less transactions costs.

Question

Quizplus · Accepted Answer

Non-current financial liabilities should be recorded initially at fair value less transactions costs, as per the guidance provided by IFRS 9. This requires an entity to measure the liability at the fair value of the consideration received, less the direct costs of issuing the liability. This approach reflects the actual economic cost of borrowing and ensures that the liability is recorded at a more relevant and reliable value. Option A is incorrect because it assumes that the face value is the fair value, which may not be the case. Option B is incorrect as it does not consider transaction costs. Option D is incorrect as it only deducts transaction costs from the face value, which may not represent the fair value of the liability.

How Should Non-Current Financial Liabilities Be Recorded Initially