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Chapter 10

Derecognition

5.1 Financial liability derecognition

A financial liability should be derecognised when the obligation is extinguished. This
may happen when the contract:

 is discharged, or

 is cancelled, or

 expires.

The difference between any consideration transferred and the carrying amount of the
financial liability is recognised in profit or loss.

5.2 Financial asset derecognition

A financial asset should be derecognised when:

 the contractual rights to the cash flows expire, or

 the entity transfers substantially all of the risks and rewards of the financial
asset to another party.

The difference between any consideration received and the carrying amount of the
financial asset is recognised in profit or loss.

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