Under IFRS 9 Financial Instruments, financial liabilities designated as at fair value through profit or loss (FVTPL) must have the fair value changes split between:

1. The change in the fair value that is attributable to changes in the liability’s credit risk.
2. The remaining change in fair value that is attributable to other factors.

Treatment of the Fair Value Change:

• GH¢100 million total increase in fair value.
• GH¢5 million of this increase is due to a reduction in Abiba Ltd’s creditworthiness, which must be recognized in other comprehensive income (OCI).
• The remaining GH¢95 million relates to other factors, such as market interest rates or other economic conditions, which should be recognized in profit or loss (P&L).

Journal Entries for the Year Ended 31 December 2015:

1. Recognizing the fair value movement in profit or loss and other comprehensive income:
   • Dr Fair value change in OCI (credit risk component): GH¢5 million
   • Cr Financial liability (reduction in credit risk): GH¢5 million
   • Dr Fair value change in P&L (other factors): GH¢95 million
   • Cr Financial liability (fair value increase): GH¢95 million

Impact on the Financial Statements:

• Statement of profit or loss:
  • Fair value change recognized in profit or loss: GH¢95 million
• Other comprehensive income:
  • Fair value change recognized in OCI due to credit risk: GH¢5 million

Notes:

• According to IFRS 9, the fair value changes attributable to credit risk adjustments are reported in OCI and are not recycled to profit or loss in future periods.
• However, if recognizing credit risk changes in OCI results in an accounting mismatch, IFRS 9 allows the entity to recognize the full amount in profit or loss, but this must be determined at initial recognition and is not reassessed.

Conclusion:

• Abiba Ltd should recognize GH¢95 million in profit or loss and GH¢5 million in OCI for the fair value movement in the financial liability.