CERTYNEX IFRS ACADEMY

Orfèvra sold a collection of silverware to a museum while retaining an option to repurchase it at a price higher than the selling price; the arrangement was accounted for as a financing arrangement, with a financial liability. At maturity, Orfèvra lets its option lapse unexercised. What does it do?

It keeps the financial liability until it is repaid to the museum, since the consideration was collected.

It derecognises the liability and recognises revenue.

It transfers the liability to equity, with no effect on profit or loss.

It retrospectively reverses the interest recognised over the option period, with no other entry.