IFRS 9 and IAS 39 — Derecognition of modified financial assets

Date recorded:


In November 2015, the staff asked the IFRS Interpretations Committee whether they would like to progress with a potential project to clarify IFRS 9 and IAS 39 in relation to the derecognition requirements on modifications or exchanges of financial assets.

The staff concluded that it would be difficult to develop a narrow-scope project, as there are potential implications for the derecognition of transferred financial assets, linkage of transactions and the derecognition of modified financial liabilities. Moreover, such a project would require a significant amount of time and resources. The staff also noted that there was limited evidence of a pressing need for new guidance.

Hence, the staff recommended not to pursue the issue at this time. Individual members of the IASB supported this recommendation in an informal sounding.

Respondents to the tentative agenda decision agreed that the issue was too broad to be resolved through an Interpretation, however five of the six respondents requested that the matter should be addressed by the Board.

The staff did not think that the comment letters provide any new information that would be directly relevant to the Board’s consideration of whether to undertake a project about the derecognition of modified financial assets. Consequently, the staff recommended that the tentative agenda decision should be finalised with only a few suggested editorial changes.


The Interpretations Committee approved issuing an agenda decision.

It was also agreed that the staff would inform the Board about the concerns raised during the discussion. The Interpretations Committee members noted that the issue should be given more priority from the Board. This was because the issue was considered of a high importance.  The agenda decision would indicate that the Interpretation Committee would not be able to solve this issue on a timely basis.


Concerns were raised related to the wording of the agenda decision. Several Interpretations Committee members indicated a preference for adding a reference to the fact that the issue would be referred to the Board. The Chairman cautioned that this was not the usual way to proceed. Instead it was agree that the staff would inform the Board of the issue. The staff noted that the Board would be discussing this month the feedback on the agenda consultation.  This would be an appropriate opportunity for the Board to consider this issue.

Some members of the Interpretations Committee indicated a preference for trying to resolve the issue within the Interpretations Committee. There was not much support for this approach.

There was also discussion about the analysis applied by the staff. Committee members asked whether it was possible to consider a modification without considering derecognition. The staff and a Board member indicated that derecognition was linked to reassessment.  The Board member indicated that when the Board discussed IFRS 9 it considered whether a modification would lead to reassessment, and concluded that only derecognition would be the trigger for reassessment.  Some Interpretations Committee members had concerns as to whether this conclusion was clear to stakeholders.

During the discussion the possibility of issuing a narrow-scope amendment to IFRS 9 was raised. A Board member indicated that it would not be feasible in the short-term and also a narrow scope amendment would not solve all the problems related to derecognition.

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