What valuation must government organizations use to report derivatives?

Question

Quizplus · Accepted Answer

Government organizations must use fair value to report derivatives as per International Public Sector Accounting Standards (IPSAS). Fair value provides a more accurate representation of the current market value of the derivatives and reflects changes in their value over time. Other valuation methods like cost or amortized cost may not reflect the true value of the derivatives and can lead to the potential over or undervaluation of a government organization's financial assets. Lower of cost or fair value is also not a suitable choice for reporting derivatives as it is mainly applicable to inventories and not financial assets.

What Valuation Must Government Organizations Use to Report Derivatives