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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Under IFRS, which of the following criteria is not necessary for a transfer of financial assets to be treated as a sale?

  1. a. Substantially all of the risks and benefits of ownership have been transferred.
  2. b. There is isolation of the transferred assets from the transferor.
  3. c. The transferor has no obligation to repay more than it collects from the customer.
  4. d. The transferor may not sell the assets to anyone else.
  5. e. All amounts are remitted to the transferee without material delay.

To determine

Identify the criteria that is not necessary for a transfer of financial assets to be treated as a sale, under IFRS.

Explanation

International Financial Reporting Standards (IFRS):

IFRS are a set of international accounting standards which are framed, approved, and published by IASB for the preparation and disclosure of international financial reports.

Justification for the incorrect option of a, c, d and e:

“Substantially all of the risks and benefits of ownership have been transferred, the transferor has no obligation to repay more than it collects from the customer, the transferor may not sell the assets to anyone else and all amounts are remitted to the transferee without material delay are the necessary criteria’s for a transfer of financial assets to be treated as a sale”, under IFRS...

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