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In general, IFRS9 calls for an entity to measure its financial instruments on the basis of amortised cost (AC) or fair value (FV), depending on the assigned accounting category assigned.
There are different ways to calculate AC and FV of for a deal:
For all approaches, the estimated future cash flow plan of a deal forms the basis for the calculation.
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Cash flow generation
For details about Cash cash flow generation, please refer to Core Cash Flow Generation
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In the solution, instead of solely calculating THE Amortised Cost or THE Fair Value, these valuation approaches will be split are split into valuation elements such as principal, outstanding amortisation of transaction costs, fair value changes related to changes in market price, etc.
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Example of the impact of changes in rating/credit spread for the income statement:
'How does the increasing credit spread of spread for a specific group of customers impact the income statement?'
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