Under IFRS,firms may elect the fair value option only in cases where it eliminates an accounting mismatch or when a group of assets is managed and evaluated using fair values.

Accounting Mismatch

Occurs when revenues and expenses or assets and liabilities affecting them are recognized in different periods, potentially misrepresenting financial performance.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) for financial reporting worldwide.

Fair Value Option

An accounting choice that allows companies to measure specific financial assets and liabilities at their fair values.