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Financial instruments — Derecognition

Background

Derecognition refers to the removal of an asset or liability (or a portion thereof) from an entity's balance sheet. Derecognition questions can arise with respect to all types of assets and liabilities. This project focuses on financial instruments. Questions regarding derecognition of assets and liabilities often arise in the context of certain special purpose entities and whether those entities should be included in a set of consolidated financial statements.

The IASB agreed to consider both a comprehensive project on derecognition or all types of assets and liabilities and also a separate, narrower scope project that would explore the need to revise guidance in IAS 39 Financial Instruments: Recognition and Measurement in the area of derecognition of financial instruments. This limited scope project would address questions that have arisen with regard to the application of conflicting aspects of IAS 39's guidance on derecognition. The project would result in an amendment to IAS 39 possibly through issuance of a separate standard on derecognition that supersedes that section of IAS 39.

 

Current status of the project

The IASB had originally proposed to replace the existing derecognition model in IAS 39 Financial Instruments: Recognition and Measurement and the associated disclosure requirements in IFRS 7 Financial Instruments: Disclosures. However, in light of the feedback received during the consultation process, the IASB decided to retain the existing derecognition requirements and to finalise improved disclosure requirements.

Disclosures – Transfers of Financial Assets (Amendments to IFRS 7 Financial Instruments: Disclosures) was issued on 7 October 2010.

 

Project milestones

DateDevelopmentComments
July 2008 Added to the active agenda
31 March 2009 Exposure Draft ED/2009/3 Derecognition published Comments deadline 31 July 2009
7 October 2010 Disclosures – Transfers of Financial Assets (Amendments to IFRS 7 Financial Instruments: Disclosures) published The amendments apply to annual periods beginning on or after 1 July 2011

Related Discussions

  • Amendments to IFRS 7

  • Oct 05, 2010

  • The Board reconsidered the transition requirements of forthcoming amendments to IFRS 7 related to derecognition of financial assets and based on limited time for implementation decided to provide the same relief in respect of comparative disclosures to all entities, not only current IFRS users but also first time adopters.

  • Derecognition of financial instruments

  • Sep 24, 2010

  • The IASB reconsidered the effective date of the forthcoming amendments to IFRS 7 in light of the timeframe given to preparers to comply with the disclosure requirements.

  • Derecognition

  • Jun 20, 2010

  • The IASB considered its near term focus on increasing the level of transparency and comparability with respect to disclosures of transfers of financial assets between IFRS and U.S. GAAP.

  • Derecognition

  • Apr 21, 2010

  • The Boards discussed the IASB derecognition model for financial assets and liabilities, focusing in particular on the issues identified by the FASB during the previous educational session as issues requiring clarification.

  • Derecognition

  • Mar 18, 2010

  • The Boards discussed accounting for repurchase agreements (repos) and similar transactions; pass-through arrangements, nonrecourse loans and accounting for assets and liabilities of SPEs; and disclosures.

  • Derecognition of Financial Instruments

  • Jan 19, 2010

  • The Board discussed offsetting of financial assets and financial liabilities and whether to include offsetting in the scope of the derecognition project.

  • Derecognition

  • Dec 18, 2009

  • The Board discussed modification and extinguishment of financial liabilities; accounting for extinguishment and modifications of financial liabilities; and modification of financial liabilities.

  • Derecognition of Financial Instruments

  • Oct 23, 2009

  • The Board discussed bankruptcy remoteness concept; accounting for repurchase agreements and similar transactions; accounting for retained interests; and the derecognition approach.

  • Derecognition

  • Sep 16, 2009

  • The Board discussed the comprehensive analysis of comment letters and outreach to constituents on the derecognition project.

  • Consolidation and Derecognition

  • Mar 23, 2009

  • The Board discussed the strategic options available to the boards in meeting the MoU commitments relating to consolidation and derecognition.

  • Derecognition

  • Feb 19, 2009

  • The Board continued its deliberations on its upcoming exposure draft on derecognition of financial assets and financial liabilities.

  • Derecognition

  • Feb 18, 2009

  • The Board discussed an approach to derecognition of financial instruments and financial liabilities.

  • Derecognition

  • Jan 22, 2009

  • The Board continued its deliberations on the upcoming ED on derecognition of financial instruments.

  • Derecognition

  • Jan 19, 2009

  • The Board discussed deliberations on its upcoming exposure draft on derecognition of financial assets and financial liabilities.

  • Derecognition of Financial Assets

  • Dec 16, 2008

  • The Board discussed open issues arising from the deliberations of the two different approaches to implement the agreed derecognition principle.

  • Derecognition

  • Nov 19, 2008

  • The Board discussed deliberations of a derecognition model to be included in a future exposure draft.

  • IAS 39 — Derecognition

  • Nov 06, 2008

  • The IFRIC decided to remove this item from its agenda in the light of the IASB's project on the topic.

  • Derecognition

  • Oct 15, 2008

  • The Board discussed two possible derecognition models.

  • Project Proposals

  • Jul 23, 2008

  • The Board voted to add two projects to its active agenda.