Gain or loss on derecognising an asset

Learning objectives

• Calculate and record the gain or loss on derecognition of a financial asset from the carrying amount, the consideration received and any cumulative amount in other comprehensive income.L2, L3
• Record the journal entries for the gain or loss on derecognition of an asset and measure their effect on the financial position, profit or loss and other comprehensive income.L2, L3

Normative references

• IFRS 9 §3.2.12Gain or loss on derecognition of a financial asset in its entirety: the difference between the carrying amount at the date of derecognition and the consideration received (including any new asset obtained less any new liability assumed), recognised in profit or loss; for the cumulative amount in other comprehensive income, see 5.7.10 (recycling for debt instruments at FVOCI) and 5.7.5 (no recycling for the equity election, para. B5.7.1).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Sigma SA sells for {consideration_received} a portfolio of loans measured at amortised cost, whose carrying amount is {carrying_amount}. The rights are transferred and derecognition of the asset in its entirety is established. Calculate the gain or loss on derecognition.L2
• Gamma SA holds a debt security measured at FVOCI, whose carrying amount (fair value at the last measurement) is {carrying_amount}. The cumulative gain in OCI is {cumulative_oci}. Gamma sells the security for {consideration_received}. Calculate the difference between the consideration and the carrying amount, then the total effect of derecognition on profit or loss after recycling the cumulative amount in OCI.L3