When should an entity derecognize a financial asset?

the contractual rights to the cash flows from the financial asset expire

it transfers the financial asset and the transfer qualifies for derecognition rules.

When an entity transfers the contractual rights to receive the cash flows of the financial asset, such transaction is

not yet a transfer of financial asset

When an entity retains substantially all the risks and rewards of ownership of the financial asset, the entity shall

continue to recognize the financial asset

derecognize the financial asset

If the entity no longer has retained control over the financial asset, it shall

derecognize the financial asset and recognize separately as assets or liabilities any rights and obligations created or retained in the transfer

continue to recognize the financial asset to the extent of its continuing involvement in the financial asset

An exchange between an existing borrower and lender of debt instruments with substantially different terms shall

be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability

not be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability

The difference between the carrying amount of a financial liability and the consideration paid shall be recognized in _____, when and only when _____.

Profit or Loss ; the financial liability is extinguished or transferred to another party.

Other comprehensive income ; the financial liability has not been transferred nor considered to be extinguished.

If a debtor pays a third party to assume an obligation and notifies its creditor that the third party has assumed its debt obligation,

the debtor does not derecognise the debt obligation unless it obtains a legal release from its creditor

the debtor derecognizes the debt obligation unless the financial liability is extinguished

The debtor recognizes a new debt obligation to the third party,

if the debtor agrees to make payments on the debt to the third party or direct to its original creditor.

if the debtor disagrees to make payments on the debt to the third party or direct to its original creditor.

If an exchange of debt instruments or modification of terms is accounted for as an extinguishment,

any costs or fees incurred are recognised as part of the gain or loss on the extinguishment.

any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability

If an exchange of debt instruments or modification of terms is not accounted for as an extinguishment,

any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability

any costs or fees incurred are recognised as part of the gain or loss on the extinguishment.

If an exchange of debt instruments or modification of terms is not accounted for as an extinguishment,

any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability

any costs or fees incurred are recognised as part of the gain or loss on the extinguishment.

A financial asset is initially measured

at fair value plus transaction costs unless it is carried at fair value through profit or loss.

at fair value minus transaction costs unless it is carried at fair value through profit or loss.

The following are the basis of subsequent measurement of the financial assets, except

none of these is exempt from the subsequent measurement basis of financial assets

the entity’s business model for managing the financial assets

the contractual cash flow characteristics of the financial asset

If an entity reclassifies financial assets, it shall apply the reclassification

prospectively from the reclassification date

retrospectively from the reclassification date

PFRS 9

Authored by bigthefun@nekosan.uk Premsofc

Business

University

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MULTIPLE CHOICE QUESTION

1 min • 1 pt

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial asset

Financial liability

Financial instrument

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which of the following are exceptions for IFRS 9 application?

Contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument as if the contracts were financial instruments

Derivatives that are embedded in leases

Contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Which of the following loan commitments are within the scope of IFRS 9?

Loan commitments that the entity designates as financial liabilities at fair value through profit or loss

Loan commitments that can be settled net in cash or by delivering or issuing another financial instrument

Commitments to provide a loan at a below-market interest rate

All of these

MULTIPLE CHOICE QUESTION

1 min • 1 pt

When an entity transfers a financial asset, it shall evaluate the extent to which it retains __________ the financial asset.

The rights and obligations of ownership

Control over

The risks and rewards of ownership

Significant influence

MULTIPLE CHOICE QUESTION

1 min • 1 pt

When an entity continues to recognise an asset to the extent of its continuing involvement, the entity shall not recognise an associated liability.

True

False

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Equity Instrument

Financial Instrument

MULTIPLE CHOICE QUESTION

1 min • 1 pt

A contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments, is a financial asset.

True

False

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PFRS 9

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Which of the following are exceptions for IFRS 9 application?

Which of the following loan commitments are within the scope of IFRS 9?

When an entity transfers a financial asset, it shall evaluate the extent to which it retains __________ the financial asset.

When an entity continues to recognise an asset to the extent of its continuing involvement, the entity shall not recognise an associated liability.

Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

A contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments, is a financial asset.

Contracts, and thus financial instruments, may take a variety of forms and need not be in writing.

An entity shall recognize a financial asset or a financial liability in its statement of financial position when, and only when, the entity becomes party to the contractual provisions of the instrument.

When should an entity derecognize a financial asset?

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