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CFM23097 | New UK GAAP: FRS 105: financial instruments: financial assets: derecognition

From HM Revenue & Customs · Corporate Finance Manual

For those entities applying FRS 105 with an accounting period beginning on or after 1 January 2016.

Derecognition criteria

FRS 105 states that a financial asset is derecognised only when:

  1. The contractual rights to the cash flows expire or are settled; or

  2. Substantially all the risks and rewards of ownership of the financial asset are transferred to another party; or

  3. The micro-entity does not expect to receive any future economic benefit from holding or disposing of the financial asset.

Accounting treatment

Any difference between consideration received (if any) and the carrying amount derecognised is recognised in profit or loss.