IFRS 9 - derecognition of loan

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bambulka
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Joined: 17 Mar 2021, 16:25

IFRS 9 - derecognition of loan

Post by bambulka »

What are the requirements to derecognize the loan? We are in process of negotiating completely new loan agreement with the new terms with the same bank (but it is a syndicate loan) but the amount borrowed is not substantially different than the amount that is due to the bank from us currently.
bambulka
Posts: 14
Joined: 17 Mar 2021, 16:25

Re: IFRS 9 - derecognition of loan

Post by bambulka »

so substantial means 10% test? But there is additional guidance: It should be noted that IFRS 9 does not prohibit derecognition of the original financial liability and the recognition of a new financial liability if the 10% test is failed. Some entities do that when the terms of a liability are modified substantially, e.g. a liability is denominated in a different currency after the modification.

So is it possible to derecognize it even though it doesn't meet 10% test?
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Marek Muc
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Re: IFRS 9 - derecognition of loan

Post by Marek Muc »

yes, substantial means 10% test

re. this guidance on voluntary' derecognition, I now think I must change it (can't remember my thinking when I wrote this), because under IFRS 9.3.3.1: An entity shall remove a financial liability from its statement of financial position when, and only when, it is extinguished [...]

would you prefer to derecognise your liability? why?
bambulka
Posts: 14
Joined: 17 Mar 2021, 16:25

Re: IFRS 9 - derecognition of loan

Post by bambulka »

well, I would prefer not to derecognize it, but I thought it's easier to defend derecognition if there is a new agreement/new terms rather than modification.
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