What is the initial accounting treatment for financial instruments under IFRS 9?

The initial accounting treatment for financial instruments under IFRS 9 involves measuring them at fair value at the time of recognition. This approach ensures that financial instruments reflect their current market prices, which provides a more relevant and useful basis for users of financial statements to assess the financial position and performance of an entity.

When a financial instrument is initially recognized, it will generally be measured at its fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial instrument. This fair value measurement gives insight into the economic benefits expected from the instrument and ensures that financial statements present a faithful representation of transactions.

The other approaches mentioned do not align with the requirements set forth by IFRS 9. For example, measuring instruments "always at cost" or recording them "at the lower of cost or fair value" does not provide the relevant market value information that IFRS aims to present. Additionally, restricting recognition to instruments that are traded on public exchanges does not capture all financial instruments that could be significant to a company's financial statements. Thus, the fair value measurement as the initial treatment aligns with the principles of IFRS 9, promoting transparency and comparability in financial reporting.