Ethan, a public limited company, develops, operates and sells investment properties. Ethan wishes to apply the fair value option rules of IFRS 9 Financial Instruments to debt issued to finance its investment properties. Ethan’s argument for applying the fair value option is based upon the fact that the recognition of gains and losses on its investment properties and the related debt would otherwise be inconsistent. Ethan argued that there is a specific financial correlation between the factors, such as interest rates, that form the basis for determining the fair value of both Ethan’s investment properties and the related debt.

Required:

Discuss how the above transactions should be recorded in the consolidated financial statements of Ethan.