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Financial instruments — Derecognition


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

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.