Home › CA Final › financialreporting › derecognition › Under Ind AS 109, derecognition of a financial a…
Under Ind AS 109, derecognition of a financial asset is APPROPRIATE when the cash flows from the financial asset have EXPIRED. Which of the following is NOT typically a basis for concluding cash flows have expired?
ALegal release of the debtor by the creditor from the obligation to pay
BA 90-day moratorium on principal repayment while the rest of the loan terms remain unchanged
CPayment of the entire due amount by the debtor
DAn options contract whose exercise period has lapsed without exercise
Answer & Solution
Correct answer: B. A 90-day moratorium on principal repayment while the rest of the loan terms remain unchanged
A short moratorium (90 days) with otherwise-unchanged terms is a minor modification, not an expiry of cash-flow rights. Substantial renegotiations (long extensions, substantial rate cuts, agreed equity conversion) DO trigger derecognition. Full payment, legal release, and unexercised option expiry are clear expiry triggers.
Related questions
Under Ind AS 109's recognition guidance, a FIRM COMMITMENT to purchase or sell goods or seA financial asset is sold under repurchase agreement that provides the TRANSFEROR with a RAn entity sells short-term receivables to a transferee but guarantees to compensate the trUnder Ind AS 109, an entity has "retained CONTROL" of a transferred financial asset (per tEntity A makes a 5-year ₹100 cr loan to B, settles a Trust, transfers the loan to the TrusUnder Ind AS 109, a SALE AND REPURCHASE agreement where the repurchase price is a FIXED PRUnder Ind AS 109's derecognition flowchart, a sale of a financial asset together with a puEntity A transfers 90% of the cash flows from a portfolio of receivables to Entity B but G