Amortized Cost - Adhoc Basis Adjustment

IFRS 9

When Hedge Accounting for an instrument using a Fair Value designation, the Hedge Item is Fair Valued and it's carrying value adjusted. This adjustment will offset the P&L movement on the Hedged Instrument.

If the Hedged Item is a Financial Instrument measured at Amortized Cost, then the Fair Value Adjustment above should be amortised to P&L.

This may begin as soon as the adjustment exists, but must begin no later than when the hedged item ceases to be adjusted for the Fair Value gains or losses.

The amortisation should be based on a recalculated effective yield at the date the amortization begins.

See IFRS 9 Para 6.5.10 Below

Requirement:

We need a way to adjust the carrying value of a Bond (mid term), and have that adjustment included in the effective interest amortization profile.

The Amortized cost framework only handles Issue Fees incurred at the inception of the instrument.