Under IFRS 9, subsequent to initial recognition, financial liabilities should be measured at amortized cost, except for financial liabilities at fair value through profit or loss (there are a number of other niche exceptions from amortized cost measurement of financial liabilities, however, they are not relevant to the subject of this FAQ).
Financial instruments sold short are simply financial instruments sold by an entity where the entity does not own them at the time of sale. How is this possible? For instance, the entity might receive those financial instruments under reverse repurchase agreement as a collateral for loan provided to another entity.
What is the measurement basis for financial instruments sold short under IFRS?