The losses that are recognized (at the time of initial recognition) as the difference between a transaction price (in relation to an asset or a liability) and the item’s fair value. In other words, for an asset that is measured at fair value at initial recognition, and where the determination of that fair value is based on a valuation method involving a quoted market price or fair value based on a valuation technique that uses observable data (inputs)- i.e., data from observable markets, the amount by which the transaction price exceeds the measured fair value is “immediately” recognized as day one losses. For a liability, it is the amount by which the measured fair value exceeds the transaction price (it is “immediately” recognized as day one losses).

Any “negative” difference between this fair value measure and the transaction price is recognized in profit or loss if the valuation involves a quoted price in an active market or uses only observable data; otherwise, it is deferred and treated as an adjustment to the carrying amount of the financial asset or liability (financial instrument).