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Under Ind AS 109, derecognition principles can be applied to a PART of a financial asset (rather than the whole) when:
AAny part of the asset can be derecognised provided documentation specifies the part
BThe part exceeds 50% of the total cash flows
CThe part comprises only specifically identified cash flows from the asset, or only a fully proportionate (pro-rata) share of all cash flows, or only a pro-rata share of specifically identified cash flows
DThe part is denominated in a foreign currency
Answer & Solution
Correct answer: C. The part comprises only specifically identified cash flows from the asset, or only a fully proportionate (pro-rata) share of all cash flows, or only a pro-rata share of specifically identified cash flows
Para 3.2.2 — a PART qualifies for separate derecognition treatment only in three specific cases: (a) specifically identified cash flows (e.g., interest strip), (b) fully proportionate share of all cash flows (e.g., 90% share), or (c) pro-rata share of specifically identified cash flows (e.g., 90% of the interest strip). Other partial transfers (like "first 80% of cash flows" or "first 4 years of a 6-year tenor") are treated as transfers of the WHOLE asset.
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