How to record fair value of written call option
Records the fair value adjustment of a written call option, which is classified as a financial liability under IFRS 9.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Loss on Derivative Instruments (P&L) | Debit | 3,500.00 | - |
| Financial Liability - Written Call Option | Credit | - | 3,500.00 |
💡 Accountant's Note
A written option that does not meet the definition of an equity instrument is a financial liability. It must be remeasured to fair value at each reporting date through profit or loss.
Practitioner & Systems Framework
💻 ERP Architecture
Classified as FVTPL; ensure liability accounts are not mistakenly mapped to equity.
⚠️ Audit Flags
Increase in volatility or underlying asset price leading to higher liability values.
📄 Required Documentation
Option contract details, Black-Scholes or Binomial model inputs, and volatility surface data.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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