THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)CO-OPERATIVE CREDIT UNION LIMITEDNOTES TO FINANCIAL STATEMENTS (continued)July 31, 20222.4 Summary of accounting policies (continued)v. Derecognition of financial assets and liabilitiesDerecognition due to substantial modification of terms and conditionsDerecognition due to substantial modification of terms and conditions Credit Union der ecognises a financial asset, suchas a loan to a customer, when the terms and conditions have been renegotiated to the extent that, substantially, it becomesa new loan, with the difference recognised as a derecognition gain or loss, to the extent that an impairment loss has notalready been recorded. The newly recognised loans are classified as Stage 1 for ECL measurement purposes, unless thenew loan is deemed to be purchased or originated credit impaired (POCI).When assessing whether or not to derecognise a loan to a customer, amongst others, the Credit Union considers thefollowing factors:•Introduction of an equity feature•Change in counterparty•If the modification is such that the instrument would no longer meet the SPPI criterionIf the modification does not result in cash flows that are substantially different, the modification does not result inderecognition. Based on the change in cash flows discounted at the original EIR, Credit Union records a modificationgain or loss, to the extent that an impairment loss has not already been recorded.Derecognition other than for substantial modificationFinancial assetsA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) isderecognised when the rights to receive cash flows from the financial asset have expired. Credit Union also derecognisesthe financial asset if it has both transferred the financial asset and the transfer qualifies for derecognition.Credit Union has transferred the financial asset if, and only if, either:•Credit Union has transferred its contractual rights to receive cash flows from the financial asset•It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full withoutmaterial delay to a third party under a ‘pass–through’ arrangementOrPass-through arrangements are transactions whereby Credit Union retains the contractual rights to receive the cash flowsof a financial asset (the ‘original asset’), but assumes a contractual obligation to pay those cash flows to one or moreentities (the ‘eventual recipients’), when all of the following three conditions are met:•Credit Union has no obligation to pay amounts to the eventual recipients unless it has collected equivalentamounts from the original asset, excluding short-term advances with the right to full recovery of the amount lentplus accrued interest at market rates.- 15 -
It seems that your browser's pop-up blocker has prevented us from opening a new window/tab. Please click the button below to open the link manually.
