CERTYNEX IFRS ACADEMY

Jade SA holds a deposit of 500,000 with the bank Terra and a loan of 480,000 from the same bank. The agreement between Jade and Terra gives Jade the right to set off these amounts only in the event of default by Terra or Jade (case facts). Jade intends to settle on a net basis. Is the criterion of a legally enforceable right of set-off met?

Yes: Jade's intention to settle on a net basis is enough to meet the criterion, since the right exists in the contract, with no other condition.

No: the right is contingent on a future event, the default; it is therefore not current.

Yes: a right of set-off provided for in the contract is current from signature, whatever the conditions of its exercise.

No: a right of set-off is not enforceable unless a court has recognised it before the counterparty's default.