Welcome to the IAS 32/39 Derecognition of financial instruments e-learning module
This module covers IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement including all amendments to these standards effective for periods beginning on or after 1 January 2010, with the exception of the following amendments:
- Reclassification of Financial Assets (issued October 2008)
- Reclassification of Financial Assets – Effective Date and Transition (issued November 2008)
- Embedded Derivatives (issued March 2009)
The module also covers the following IFRIC interpretations:
- IFRIC 9 Reassessment of Embedded Derivatives (issued March 206)
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation (issued July 2008)
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (issued November 2009)
It should be noted that in August 2005, a new financial instruments disclosure standard, IFRS 7 Financial Instruments: Disclosures was issued and replaced the disclosure requirements of IAS 32 for periods beginning on or after 1 January 2007. The disclosure requirements of IFRS 7 are beyond the scope of this module.
This module covers the background, scope and principles under IAS 32 and IAS 39 in respect of derecognition of financial instruments and its application in practice. By completion of this module, you will be able to:
- Explain the steps involved for securitization;
- Apply SIC-12 criteria to determine whether the Special Purpose Entity to which receivables are transferred, should be consolidated;
- Identify when the rights to the cash flows on the receivables have been transferred and the next steps;
- Describe the requirements under SIC-12 and its use in determining at which level the decision tree is applied;
- Apply the derecognition decision tree;
- Identify the accounting entries for transactions where derecognition failed;
- Identify the impact of deep in the money and deep out of the money options on derecognition;
- Identify situations of continuing involvement, partial derecognition and determine the corresponding accounting entries for it;
- Apply the accounting requirements under IAS 39 on financial liabilities;
- Identify and apply the accounting requirements under IAS 39 on the extinguishment of liabilities; and
- Apply derecogntion principles to practical scenarios where financial liabilities are restructured or renegotiated.
The duration of this module is about 1 hour and there is an assessment at the end of the module to test your knowledge.
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