Which one of the following best represents when financial assets are derecognized under IFRS 9?
A. When the contractual rights to the benefits of the financial asset have changed
B. When the contractual rights to the cash flows from the financial asset expire
C. When the financial asset is no longer probable of being collected
D. When the financial asset’s fair value has diminished to an immaterial value
Under IFRS 9, a financial asset is derecognized when the entity no longer has control over the associated contractual cash flows. Therefore, the most appropriate representation of when financial assets are derecognized under IFRS 9 is:
A. When the contractual rights to the benefits of the financial asset have changed
This typically occurs when the contractual obligations to receive the cash flows from the financial asset have been transferred to another party, effectively transferring the risks and rewards of ownership. The other options listed do not directly align with the core principle of derecognition under IFRS 9.
