An entity can designate any financial asset (or financial liability) to the "fair value through profit or loss" (FVTPL) category on initial recognition provided that this designation results in more relevant information.

Question

Quizplus · Accepted Answer

According to IFRS 9, an entity can designate a financial asset or liability at fair value through profit or loss upon initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as 'an accounting mismatch') or if the financial assets are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the grouping of financial assets is provided internally on that basis to the entity's key management personnel. This designation can lead to more relevant information being provided.

An Entity Can Designate Any Financial Asset (Or Financial Liability)