EPPA4123 Accounting Theory and Practice

Assets (Intangible & Financial)

Group Legacy: Au Chong Yee A140176Tan Yee Shin A140102

Serena Khoo Su Yin A140207Nor Aini Binti Muhammad A140213

Nurul Balqis Binti Mohd Nasir A140151Nur Haliza Amirah Binti Halemi A140099

Intangible Assets

MFRS 138Intangible Asset

Intangible asset is an identifiable non-monetary asset without physical substance.

MFRS 138 Para 11, 12

MFRS 138 Para 13

MFRS 138 Para 17

Para11 & 12 - Identifiable• An asset is identifiable if it either:

Para 11: Separable Para 12: Arises from contractual or legal rights

Para 13 - Control• An asset is control if:

Para 13: The entity has the power to obtain future economic benefits

Para 17 - Future Economic Benefits• An asset is future economic benefit if:

Para 17: An intangible asset may include revenue from sales, cost savings or other benefits resulting from the use of asset by the entity

Recognition & Measurement•Para 18: To recognize an item as intangible asset, an entity has to

make sure it meets 2 conditions (i) The definition of an intangible asset

(ii) Para21: The recognition criteria *Expected future economic benefits will flow to entity*Cost of asset can be measured reliably

Acquisition of Intangible Assets

(i) Separate Acquisition

Corporate A Corporate B

Para 25-The price reflect expectations about profitability which expected future economic benefits of asset will flow to the entity. -The cost can be measured reliably (either in the form of cash or other monetary assets).

Para 27 - Cost

Purchase Price: -Import duties-Non-refundable purchase taxes-After deducting trade discounts and rebates

Directly Attributable Costs:-Costs of employee benefits-Professional fees from bringing asset to working condition-Costs of testing

Expenditures NOT part of the cost of an intangible asset

Para 29 -Cost of introducing new product (Advertising & Promotion)-Cost of staff training-Administration and other general overhead cost

Costs NOT included in the carrying amount of IA

Para 30-Costs incurred while asset capable of operating in the manner intended by management has yet to be brought into use-Initial operating losses

Example: Aston Ltd acquires new energy efficient technology that will significantly reduce its energy costs for manufacturing. Cost incurred include: Cost of new solar tech1,500,000Trade discount200,000Training course for staff in new tech 70,000Initial testing of new tech 20,000Losses incurred while other parts of plant shut downduring testing & training 30,000The cost that can be recognized and capitalized is: Cost of new solar tech1,500,000Less trade discount (200,000)Plus initial testing 20,000Total 1,320,000

(ii) Business Combination• Combine with other entity to share its intangible assets among them. • Para 33 - Cost of intangible asset is its fair value at acquisition date.

R&D expenditure that: (a)Relates to an in-process R&D project(b)Is incurred after the acquisition of that project

Applying the requirements in para 54-62•Research expenditure – recognized as expense•Development expenditure that

- does not satisfy para 57 – recognized as expense- satisfy para 57 – added to the carrying amount

Subsequent Expenditure (In Process R&D Project) Shall be accounted for in accordance

with para 54-62

Para 57: 6 recognition criteria in determining if developments are recognised as intangible asset.

Annual Report 2014

Sourced from Telekom Malaysia Annual Report

(iii) Government Grant• When government transfer to an entity intangible asset to access other

restricted resources.

•Para 44 – Recognized initially at fair value or nominal value plus any expenditure directly attributable to prepare asset for intended use.

Airport landing rights Gaming rights

Para 45If the fair value of acquired or transferred asset can be measured reliably:

If the fair value of acquired asset is unable to be determined:

(iv) Exchange of Assets

Fair Value (Acquired Asset)

Cost (Acquired Asset)

Carrying amount(Acquired Asset)

Cost (Acquired Asset)

Annual Report 2014

Sourced from Malaysia Airports Annual Report

(v) Internally Generated Intangible Asset

GoodwillOther

intangible assetsPara 48 – proscribes the recognition

of internally generated goodwill as an intangible.

Reasons: *not separable and any costs incurred are unlikely to be specifically identifiable as generating goodwill

Research phase

Development phase

Research phase

Para 54 – No IA arising from research shall be recognized. Examples of research activities:(a)Activities aimed at obtaining new knowledge(b)The search for evaluation and applications of research findings or knowledge(c)The search for alternatives for materials, devices, products, processes, systems or services(d)The formulation, design, evaluation and final selection of possible alternatives for new products.

Para 57 - IA arising from development shall be recognized when an entity show the following criteria: (a)It is technically feasible to complete the IA so that it will be available for use or sale;(b)Its intention to complete the IA for use or sale;(c)Its ability to use or sell the IA;(d)It can be demonstrated that the IA will generate probable future economic benefits;(e)Adequate technical, financial and other resources to complete the development and to use or sell the IA are available; and(f)Its ability to measure reliably the expenditure attributable to the IA during its development.

Development phase

Para 67 (a)Selling, administrative and other general overhead expenditure(b)Identified inefficiencies and initial operating losses incurred before the asset achieves planned performance(c)Expenditure on training staff to operate the asset

Not included as the cost of an internally generated IA

Example: An entity is developing a new production process. During 2015, expenditure incurred was £1m of which £900,000 was incurred before 1 Dec 2015 and £100,000 was incurred between 1 Dec 2015 and 31 Dec 2015. At 1 Dec 2015, the production process met the criteria for recognition as an IA. The recoverable amount of know-how embodied in the process (including future cash outflows to complete the process before it is available for use) is estimated to be £500,000. What is the cost of internally generated IA at the end of 2015?

ANSWER: £100,000EXPLAINATION: The production process is recognized as an IA at a cost of £100,000 at the end of 2015 because expenditure incurred since the date when recognition criteria were met, i.e. 1 Dec 2015. £900,000 incurred before 1 Dec is recognised as expense and it does not form part of cost of the production process recognised in the statement of financial position.

Issue: IAS 38 on capitalization of goodwill• Sourced by: Llyod Austin from Business Review: Accounting for IA, The University of

Auckland• The issue of IAS 38 in 1998 was being discussed due to the increasing significance of

intangible assets since 1980’s.• This has been reflected by the increasing proportion of the company’s market value

attributable to the existence of intangibles.• However, there is a lack of relation between intangible costs & specific future

revenue. • For example, in Lion Nathan’s 30 Sept 2005 FS, brands made up $2,381mil of total

assets of $4,064mil.

The brand constituted -39.3% of market value of company’s debt & equity-58.6% of market value of equity

Real Life Cases: Implication of adopting IAS 38 beginning 2005

Vodafone is an UK firm, paid £101,436bil for the equity (net assets) of the German telecommunications company Mannesman. At the date of acquisition, Mannesman BS equity had a fair value of £18,408bil. The surplus of £83,028bil was recorded as goodwill in consolidated FS.

2001-2004 : Goodwill was systematically amortized

Thus, impairment of £19.4bil in the goodwill in Mannesman was recognized. The goodwill in its Italian and Swedish subsidiaries was impaired by £3.6bil and £515mil, resulting a total impairment expense of £23.5bil.

2005 : IAS required Vodafone to cease amortizing but test it for impairment

Refer to Vodafone Annual Report 2016

Sourced from Vodafone Group Plc Annual Report

Continued:

Para 68Expenditure on an IA shall be recognized as an expense when it incurred, unless:-It forms part of the cost-The item is acquired in a business combination and cant be recognized as an intangible asset. It forms part of the amount recognized as goodwill at the acquisition date.

Examples include:(a)Start-up activities or opening a new facility/business(b)Training(c)Advertising & promotional activities(d)Relocating or reorganizing of entity

Recognized as Expense

Cost Model

Revaluation Model

Para 74 Cost Model

Carrying Value

Cost of Intangible Assets

Accumulated Amortisation

Accumulated Impairment

Para 75 Revaluation Model

Carrying Value

Revalued Amount

Subsequent Accumulated Amortisation

Subsequent Accumulated Impairment

Revaluation Model

Guidelines of Revaluation

Model

Apply to whole intangible assets even though parts of the asset did not meet the criteria for recognition.

Frequency of revaluations depends on the volatility of the fair values of intangible assets.

Para 77

Para 79

If there is no active market to revalue the assets , the revalued intangible assets shall be carried at cost less any accumulated amortization & impairment loss.

Para 81

If the fair value of a revalued intangible asset can no longer be measured by reference to an active market, the carrying amount of the asset shall be the last revaluation amount less any subsequent accumulated amortization and subsequent impairment losses.

Para 82

Para 8

Useful Life of Intangible Assets

Useful

life???

Period over which an asset is expected to be available for use by an entity;

The number of production or similar unitsexpected to be obtained from the asset by an entity.

OR

An entity shall assess the useful life of intangibleassets to be either:

Para 88

Finite Useful Life

Indefinite Useful Life

Useful Life

Factors Considered in Determining Useful Life of

Intangible Assets

Finite-lived Intangible Assets

Amortization MethodsStraight-line Method

Unit of Production Method

Diminishing Balance Method

Finite-lived Intangible Assets

Finite-lived Intangible Assets

Amortization MethodsRevenue-based Method

Appropriate when expected future revenues are a reliable ‘proxy’ for the economic benefits embodies in the asset & the pattern in which the benefits are expected to be consumed.

A measure of the results of using an asset rather than a measure of the economic benefits embodied within the asset.

Example:An entity that has a 5 years exclusive license to distribute a product. In the first year the entity decides not to distribute the product because it wants to achieve maximum sales from a previous generation product. In this case, the license represents a single right to distribute the product for a finite time period and it is appropriate to amortize the license in the first year because the product could have been distributed, ie the benefits inherent in the license were available and have diminished by a fifth regardless of the actions of the entity. This is consistent with the requirement in MFRS 138.97 for amortization to commence when the intangible asset is available for use.

Revenues result from using an asset do not necessarily reflect the consumption of the benefits inherent in the intangible asset itself.

KPMG Publication: In the Headlines – Proposal to ban Revenue-based Amortization Publication date: December 2012

• IASB proposes to amend IAS 16 (PPE) & IAS 38 (IA) to state that Revenue-based methods of amortization cannot be used. • Under this method, the profile of amortization expense reflects the profile of revenues

generated through use of the asset. • Media sector often used this method to amortize their IA.

Because films & video games often generate higher revenues in the earlier years of their life

It tends to accelerate expense recognition

Ernst & Young Publication:Impairment of long-lived assets, goodwill & Intangible assets in Media & Entertainment Industry

Continue…Example of fact pattern:o An entity has programme rights that last for 4 years, which cost 400 to acquire.oThe programme rights are expected to generate total revenue of 800, and the programme is expected to run 6 times over 4 years. oActual revenue and runs are as follows:

Revenue RunsYear 1 500 2

Year 2 200 2

Year 3 75 1

Year 4 25 1

Total 800 6

Amortization Charges Based on Different Methods:

KPMG Publication: In the Headlines – Restricting the use of Revenue-based Amortization Publication date: May 2014

• On 12 May 2014, the IASB issued amendments to clarify that the Revenue-based methods are permitted to be used when revenue & consumption of the economic benefits of IA are ‘highly correlated’, or when the IA is expressed as a measure of revenue.

• Effective date: 1 Jan 2016• ‘Highly correlated’ term was new term that introduced to limit the use of this method,

because revenue is affected by other inputs & processes, selling activities & changes in sales volumes & prices, which are not directly linked to the consumption of the economic benefits inherent in the IA.

• E.g. The right to operate a toll road until the operator has collected a sum of 10 million.

Implications?Changing to adopt straight-line amortization method, media companies are likely to recognize less amortization – and therefore higher profit in earlier years.However, additional impairment charges may arise when there is significant decline in future cash flows after the early years of an asset’s useful life.

Finite-lived IA: Contractual or other legal rightsPara 94

Para 94

Para 96

Significant Cost? Renewal Cost = Cost to acquire a new IA

Example: Amortization of IA arise from Contractual or Legal Rights Innovative Gadgets Ltd. patented one of their products at a cost of $100,000. The patent is enforceable for 10 years, so the legal life is 10 years. However, the company expects to produce the patented product for only 5 years and expects to replace it with an advanced version at the end of 5 years. The company uses straight-line method of amortization.

Cost = $100,000 Legal life = 10 years Expected useful life = 5 years Amor. Method = Straight-line method

Solution:Amortization period = 5 years, which is shorter of legal life & economic life

Amortization per year = $100,000/5 years = $20,000 per year

Finite-lived IA: Residual ValueResidual value (RV) = Zero, unless:

Para 94

There is a commitment by a third party to purchase the asset at the end of its useful life

There is an active market:(i)RV can be determined by reference to the market; and (ii)The market will exit at the end of the asset’s useful life

OR

Indefinite-lived Intangible Assets Para 88

Para 107

Para 108

Compare recoverable amount & carrying amount

Para 109

Retirement & Disposal of IA When an IA shall be derecognized?

Para 112

On disposal

When no future economic benefits are expected from its use its use or disposal

OR

Gain/Loss Recognize in P&L

Gain from disposal of IA Revenue

Source: Malaysia Airports, 2014

Retirement & Disposal of IA

Amortization of a finite-lived IA does not cease when the asset is no longer used, unless:The asset has been fully depreciated; or The asset is classified as asset held for sale

Para 117

a

b

Disclosure The main disclosures are (distinguish between internally-generatedintangibles & other intangibles):

✓✓✓

Source: Media Prima, 2014

Scenario 1: No impairment loss recognize.-Because RV > CV

Finite Finite

Finite

Continue…Source: Media Prima, 2014

Finite Source: Malaysia Airports, 2014

Scenario 1: Impairment loss had been recognized.

Continue…Source: Malaysia Airports, 2014

Disclosure An entity shall also disclose:

FINANCIAL INSTRUMENTS

OVERVIEW DEFINITIONS

CLASSIFICATIONS & RECLASSIFICATIONS

RECOGNITIONS & DERECOGNITIONS

MEASUREMENTS

FINANCIAL INSTRUMENT

WHAT IS FINANCIAL INSTRUMENT?

• Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity (MFRS 132)

• Financial instrument include

ASSETS LIABILITY OR EQUITY

Note Receivable Note payable

Investment in Bond Bond

Investment in Equity securities Ordinary shares/ Preference shares

(MFRS 132)Any contract that gives rise to a financial asset of one entity and

a financial liability or equity instrument of another entity

FINANCIAL ASSET

FINANCIAL LIABILITY &

EQUITY• cash• contractual right

• to receive cash or another financial asset from another entity

• to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity

Not Cover

FINANCIAL INSTRUMEN

T

CLASSIFICATION

OF FINANCIAL

ASSET

MFRS 9 Amortised Cost

Fair Value through Other Comprehensive Income (FVOCI)

Financial Asset at Fair Value Through Profit or Loss (FVTPL)

MFRS 139

Amortised Cost Held to maturity

Loans and receivable

Fair Value Available for sale

Held for trading

RULE BASED APPROACH PRINCIPLE BASED APPROACHVS

Objective is to hold financial asset in order to collect contractual cash flows

Objective is achieved by both collecting contractual cash flows and selling financial assets

Cash flows that are solely payments of principle and interest on the principal amount outstanding

Cash flows that are solely payments of principal and interest on the principle amount outstanding

Business model

Terms of the contract

AMORTISED COST

FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI)

FINANCIAL ASSETS AT FAIR VALUE

THROUGH PROFIT OR LOSS (FVTPL)

MFRS 9 Para 4.1.2 MFRS 9 Para 4.1.2A MFRS 9 Para 4.1.4

Classification based on:Test business model entities (holding the to collect contractual cash flows /sell financial assets)The characteristics of the contractual cash flows of financial assets

“A financial asset shall be measured at fair value through profit or loss unless it is measured at amortized cost in accordance with paragraph 4.1.2 or at fair value through other comprehensive income in accordance with paragraph 4.1.2A”

MEASUREMENT

EXAMPLE 1 : AMORTIZED COSTCompany A Company B

1/1/2015,Company B Purchases bondsHold the securities until the maturity

date that is 31/12/2020Company holds bonds to collect their

contractual cash flow

RM 40,000 of the 8%, 5 year bonds for RM 43,412 which provides a 6% return. The bonds pay interest semiannually

EXAMPLE 2: FVOCI

Company A Company B

1/1/2015,Company B Purchases bondsHold the securities until the maturity

date that is 31/12/2020Company holds bonds to collect their

contractual cash flow and would sell it in particular circumstances

RM 40,000 of the 8%, 5 year bonds for RM 43,412 which provides a 6% return. The bonds pay interest semiannually

EXAMPLE 3 : FVTPL

Company A Company B

1/1/2015,Company B Purchases bondsManagement intends to hold this debt

security until there is a change in interest rates or the company requires the cash

Company B sell bonds at the end of the year. The fair value of bonds at 31/12/2015

is RM47,200

RM 40,000 of the 9%, 5 year bonds for RM 46,304,which provides a 11% return.

RECLASSIFICATION OF

FINANCIAL INSTRUMENTS

MEASUREMENT CATEGORY BEFORE RECLASSIFICATION

MEASUREMENT CATEGORY AFTER RECLASSIFICATION

IMPACT

Amortized Cost FVTPL Recognize difference between amortized cost and FV in profit or loss

FVTPL Amortized Cost FV on reclassification date= new gross carrying amountCalculate EIR based on new gross carrying amount

Amortized Cost FVOCI Remeasure to FV, with any difference recognized in OCI.EIR determined at Initial recognition is not adjusted as a result of reclassification

FVOCI Amortized Cost Reclassify FinancialAssets at fair valueRemove cumulative balance from OCI.Adjusted amount = Fair value

FVTPL FVOCI FV on reclassification date= new gross carrying amountCalculate EIR based on new gross carrying amount

FVOCI FVTPL FV on reclassification date= new gross carrying amountReclassify accumulate OCI to Profit or Loss (on reclassification date)

MEASUREMENTS OF FINANCIAL ASSETS

MEASUREMENT OF FINANCIAL ASSET – MFRS 9

FVTPL FVOCI AMORTIZED COSTInitial measurement Fair Value Fair value ± Transaction

CostFair value ± Transaction

Cost

Subsequent Measurement

Fair Value Fair Value Amortised Cost

Gain and loses Profit or loss Other Comprehensive Income

Not Recognize

EXAMPLE OF INITIAL MEASUREMENT (MFRS 9)

FVTPL FVOCI AMORTIZED COST

Fair Value Fair value ± Transaction Cost Fair value ± Transaction Cost

RM 1000 RM 1000 + RM 70= RM 1070

RM 1000 + RM 70= RM 1070

RM 70 will be recognize in Statement of Profit or Loss

as Expense

EXAMPLE OF SUBSEQUENT MEASUREMENT FVTPL FVOCI AMORTIZED COST

Fair Value Fair Value Amortized Cost

RM 1000 RM 1000 RM 1070

RM 70 will be recognize in Other Comprehensive Income

as Unrealized Gain or Loss

Price of Debt Securities = RM 1000. Transaction cost = RM 70Fair Value = RM 1000

EXAMPLE OF GAIN AND LOSES

FVTPL FVOCI AMORTIZED COSTFair Value Fair Value Not Recognize

RM 1100 RM 1100 -

RM1100 – RM1000 = RM100RM 100 will be recognize in Statement of Profit or Loss as Gain in Changes in Fair Value

RM1100 – RM1000 = RM100RM 100 will be recognize in

Other Comprehensive Income as Unrealized holding gain or loss

Example : Assume that Fair Value of Debt Securities increased to RM1100 on 31st December 2014 Value

RECOGNITION AND

DERECOGNITIONOF FINANCIAL INSTRUMENTS

RECOGNITION

• Describe what, when and how an item should be recorded in the financial statements

• Entity shall recognize a financial asset or financial liability when and only when the entity becomes a party to the contractual provisions of the instrument

(MFRS 9, PARA 3.1.1)

REGULAR WAY OF PURCHASE OR SALE(B 3.1.3)

• A regular way purchase or sale of financial assets is recognised using either trade date accounting or settlement date accounting as described in paragraphs B3.1.5 and B3.1.6

REGULAR WAY OF PURCHASE OR SALE FINANCIAL ASSETS

(PARA 3.1.2)

TRADE DATE SETTLEMENT DATE

TRADE DATE• Trade date is the date an entity commits itself to purchase or sell an

asset. Trade date accounting refer to :a. Recognise of an asset to be received and the liability to pay for it on the trade dateb. Derecognition of an asset that is sold, recognition of any gain or loss on disposal and

the recognition of a receivable from the buyer for payment on the trade date

• In other words, accountant will record the transactions that take place on the date at which an agreement has been entered (the trade date), and not on the date the transaction has been finalized (the settlement date).

THE SETTLEMENT DATE(B 3.1.6)

• The date an asset is delivered to or by an entity.• Settlement date accounting refer to :

• In other words, settlement date is where the actual payment accur

The derecognition of an asset on the day it

received by the entity

the derecognition of an asset and recognition of any gain or loss on disposal on the day that it is delivered by the entity. When settlement date accounting is applied an entity accounts for any change in the fair value of the asset to be received during the period between the trade date and the settlement date in the same way as it accounts for the acquired asset.

Regular Way of Transaction(MFRS 9 B3.1.3)

TRADE DATE SETTLEMENT DATE

25/11/2014 30/11/2014 5/12/2014

Delivery of Financial Asset

CONTRACT

Delivary of asset

within a timeframe

Example of Regular Way Purchase

Situationtrade date financial year end settlement date

29/11/2014 31/12/2014 04/01/2015

Company APPLE commits to purchase a Corporate

Bond from Company Samsung for RM1000

Fair value of the corporate bond is

RM1002

Fair value of the corporate bond is RM 1003

Financial Asset Accounted for Amortized Cost

TRADE DATE ACCOUNTING SETTLEMENT DATE ACCOUNTING29/11/2014 DR CR 29/11/2014 DR CR

CORPORATE BOND PAYABLE FOR COMPANY SMSG

10001000

NO ACCOUNT ENTRY

31/12/2014 31/12/2014

NO ACCOUNT ENTRY NO ACCOUNT ENTRY

04/01/2015 04/01/2015

PAYABLE FOR COMPANY SAMSUNG CASH

10001000

CORPORATE BOND CASH

1000

1000

RECOGNIZE BOND

RECOGNIZE BOND

ASSUMPTION : Company apple plants to hold the corporate the bond to maturity (5 years) with the contractual right toReceived fixed interest 8 % annually.

FINANCIAL ASSET ACCOUNTED for FVTPL

TRADE DATE ACCOUNTING SETTLEMENT DATE ACCOUNTING

DR CR DR CR

29/11/2014 29/11/2014

CORPORATE BOND PAYABLE FOR COMPANY SMSG

10001000

NO ACCOUNTING ENTRIES

31/12/2014 31/12/2014

CORPORATE BOND GAIN/LOSS ON CHANGING FAIR VALUE ( PnL)

22

RECEIVABLE GAIN/LOSS ON CHANGING FAIR VALUE ( PnL)

22

04/01/2015 04/01/2015

PAYABLE FOR COMPANY SMSG CASH

10001000

CORPORATE BOND CASH

10031000

CORPORATE BOND GAIN/LOSS ON CHANGING FAIR VALUE (PnL)

11

RECEIVABLE GAIN/LOSS ON CHANGING FAIR VALUE (PnL)

21

ASSUMPTION : Company Apple plans to classify the corporate bond as held for trading

RECOGNIZE BOND

BOND WAS NOT YET BEING TRANSFERRED

RECOGNIZE BOND

REVERSE

DERECOGNITION DEFINITION• Derecognition is the removal of a previously recognized financial

asset or liability from an entity's balance sheet. A financial asset should be derecognized if either the entity's contractual rights to the asset's cash flows have expired or the asset has been transferred to a third party (along with the risks and rewards of ownership). • If the risks and rewards of ownership have not passed to the buyer,

then the selling entity must still recognize the entire financial asset and treat any consideration received as a liability.

PRINCIPLES OF DERECOGNITION(MFRS 9, 3.2.2)

• Only specifically identified cash flows from a financial asset.

• Only a fully proportionate (pro rata) share of the cash flows from a financial asset.

• Only a fully proportionate (pro rata) share of specifically identified cash flows from a financial asset .

An entity shall derecognise a financial asset when…

(MFRS 9 B 3.2.4)

The contractual right to the cash flows from the financial asset expired

Transfer the contractual rights to receive the cash flows of the financial asset Retains the contractual rights to

receive the cash flows of the financial asset but assume a contractual obligation to pay the cash flow to one or more recipients in an arrangement that meets the conditions

Risk and Reward of the Ownership(MFRS 9, PARA 3.2.6, B3.2.4)

Derecognition of Financial Assets

Start

Entire asset or part?

Rights to cash flow

expired?

Transfer of

rights?

Obligation to

pay CF?

Risk/Reward

transfer?

Risk/Reward

retained?

Control retained

?

Derecognition

Continue to recognize

Derecognition

Continue to recognize

Derecognition

Yes

Yes

Yes

YesYes

Yes

No No

No

No No

No