Recognition of financial instruments on first-time adoption
Financial assets and financial liabilities are allowed to be recognised at fair value only on initial recognition, subject to the fulfilment of certain requirements. How are these dealt with during first-time adoption?
An entity is required to measure a financial asset or financial liability at its fair value. Where the fair value at initial recognition differs from the transaction price, the entity should recognise the difference between the fair value at initial recognition and the transaction price as gain or loss. However, for a first-time adopter, an entity is allowed to apply these requirements relating to fair value of financial assets and financial liabilities at initial recognition prospectively to transactions entered into on or after the date of transition to Ind AS. The entity shall recognise the deferred difference as gain or loss only to the extent that it arises from a change in a factor that market participants would take into account when pricing the asset or liability.