CERTYNEX IFRS ACADEMY

A working paper analyses the criterion of a legally enforceable right of set-off. Which of its conclusions is wrong?

The right of set-off must not be contingent on a future event in order to meet the criterion of a current right.

The right must be legally enforceable in the normal course of business, in the event of default and in the event of insolvency or bankruptcy.

The analysis of whether the right is enforceable concerns the law applicable to the agreement and to the counterparties concerned.

A master netting agreement is enough by itself to meet the enforceable right criterion, even when its exercise depends on a default.