This free, guided checker walks your finance team through the key decision points for IFRS 9 Financial Asset Derecognition. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Derecognition analysis begins when the entity transfers contractual cash flow rights or retains them but assumes a pass-through obligation meeting IFRS 9 strict criteria. Apply the flowchart at the consolidated level first and decide whether it covers the whole asset or a specifically identified part such as an interest strip (IFRS 9.3.2.1-3.2.2). Legal form is not conclusive - factoring with full recourse can transfer legal title while failing the risks-and-rewards test later in the flowchart.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
A qualifying pass-through requires no delay in remittance, no sale of cash flows other than as collateral, and no retention of substantially all credit risk after transfer. Test each IFRS 9.3.2.5 condition against the securitisation or participation documents: an obligation to advance funds when collections fall short, or the right to reinvest collections beyond short-term cash equivalents with interest passed on, breaks the arrangement. Sub-participations and intermediated structures are the usual candidates, and all three conditions must be met simultaneously.
No transfer has occurred under IFRS 9.3.2.4-3.2.5; continue recognising the financial asset in full and recognise a financial liability for any consideration received.
Official guidance: IFRS issued standards
Compare exposure before and after transfer including credit risk, late-payment interest, and prepayment benefits; repurchase at fair value generally transfers substantially all risks and rewards. The test in IFRS 9.3.2.7 compares the entity's exposure to the variability in the present value of future net cash flows before and after the transfer, computed and probability-weighted where the answer is not obvious (IFRS 9.3.2.8-B3.2.4). Document the quantitative comparison when recourse, guarantees, or options leave residual exposure.
Derecognise the financial asset, recognise any servicing asset or liability and other retained interests at fair value, and record the gain or loss (IFRS 9.3.2.6(a); 3.2.10-3.2.12).
Official guidance: IFRS issued standards
Control is retained when the transferee cannot sell the asset without restriction; repurchase at fixed price, deep-in-the-money call options, or credit guarantees often fail the control test. The question is the transferee's practical ability, not merely its contractual rights: what matters is whether it can actually sell the whole asset unilaterally to an unrelated party (IFRS 9.B3.2.7-B3.2.9). A call option over a readily obtainable asset does not preclude the transferee selling, but over an illiquid asset it usually means control is retained.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
When control is not transferred but substantially all risks and rewards are not retained, the entity continues to recognise the asset to the extent of its continuing involvement in the transferred asset. The extent of continuing involvement is the extent to which the entity remains exposed to changes in the value of the transferred asset - for a guarantee, the lower of the asset's carrying amount and the maximum amount repayable (IFRS 9.3.2.16(a)). Securitisations with retained subordinated tranches or partial guarantees are the classic fact patterns here.
Reapply the derecognition flowchart in IFRS 9.B3.2.1: retained control with neither transfer nor retention of substantially all risks and rewards requires continuing-involvement accounting (IFRS 9.3.2.6(c)(ii)).
Official guidance: IFRS issued standards
Continuing involvement includes guarantees, options, swaps, or retained sub-participation; measurement follows the specific IFRS 9 continuing involvement guidance for each form. IFRS 9.3.2.16 sets the extent: for guarantees it is capped at the maximum repayable amount, while for options it depends on whether the asset is measured at amortised cost or fair value and whether the option is written or purchased (IFRS 9.B3.2.13). Identify every retained right and obligation in the deal documents before selecting the measurement basis.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
On partial derecognition the previous carrying amount is allocated based on relative fair values on the transfer date; a gain or loss arises on the part derecognised. Where the retained part has no quoted price, the residual between the fair value of the larger asset and the consideration received for the transferred part is the best estimate of its fair value (IFRS 9.3.2.14). For FVOCI debt instruments, allocate the accumulated OCI balance between the parts on the same relative fair value basis before recycling.
Allocate the previous carrying amount between the derecognised part and the part still recognised by relative fair values at the transfer date before recognising any partial derecognition gain or loss (IFRS 9.3.2.13).
Official guidance: IFRS issued standards
Guarantees and repurchase obligations require recognising a liability measured to reflect the entity's continuing exposure, with subsequent measurement under IFRS 9 impairment or fair value rules. Under IFRS 9.3.2.17 the associated liability is not simply the fair value of the obligation: it is calibrated so the net of asset and liability equals the retained rights and obligations - for a guarantee, the guarantee amount plus the unamortised fair value of the guarantee fee. Income on the asset and expense on the liability continue to be recognised and must not be offset (IFRS 9.3.2.21-3.2.22).
Recognise an associated liability measured so that the net carrying amount of the transferred asset and liability reflects the rights and obligations the entity has retained (IFRS 9.3.2.17).
Official guidance: IFRS issued standards
Transferee accounting mirrors transferor conclusions; when the transferor retains control the transferee recognises a receivable from the transferor rather than the underlying financial asset. IFRS 9.B3.2.15 requires this symmetry so the same asset does not appear on two balance sheets, with the exception that a transferee obtaining the right to sell or repledge collateral recognises that right per IFRS 9.3.2.23. In group situations, check the conclusion at both separate and consolidated reporting levels (IFRS 9.3.2.1).
Recognise continuing involvement asset and liability at allocated amounts per IFRS 9.3.2.16-3.2.17, with income and expense reported gross (IFRS 9.3.2.21-3.2.22). Align the transferee's accounting: when a transfer fails derecognition the transferee recognises a receivable from the transferor, not the underlying financial asset (IFRS 9.B3.2.15).
Official guidance: IFRS issued standards
Sale with agreement to repurchase at fixed price or below-market price retains substantially all risks and rewards; fair-value repurchase price generally supports derecognition. IFRS 9.B3.2.5 lists the retention fact patterns - fixed-price repos, securities lending, total return swaps, deep-in-the-money options, and guaranteed short-term receivables sales - while IFRS 9.B3.2.4 lists transfers that qualify. Repos of substantially-the-same assets and rights to substitute similar collateral are treated the same way as repos of the identical asset (IFRS 9.B3.2.16(b)-(c)).
Account for the arrangement as a collateralised (secured) borrowing because a fixed-price repurchase retains substantially all risks and rewards; do not derecognise the financial asset (IFRS 9.3.2.15; B3.2.16(a)).
Official guidance: IFRS issued standards
The gain or loss includes cumulative fair value adjustments previously recognised in OCI that are recycled to profit or loss on derecognition for debt instruments measured at FVOCI. Include every component of consideration - cash, servicing assets or liabilities recognised under IFRS 9.3.2.10, and new derivatives or guarantees measured at fair value under IFRS 9.3.2.11. For equity instruments designated at FVOCI, the accumulated reserve is transferred within equity and never recycled to profit or loss (IFRS 9.B5.7.1).
Post the derecognition entries and recycle accumulated OCI to profit or loss for FVOCI debt instruments (IFRS 9.3.2.12; 5.7.10). Calculate the derecognition gain or loss, including consideration components, allocated carrying amounts, and OCI recycling, before posting entries (IFRS 9.3.2.12-3.2.13; 5.7.10).
Official guidance: IFRS issued standards
Send us your situation and one of our senior CPAs will review it with you - fixed fee, no surprises.
Contact Us