Credit Union Annual Report 2022 - Flipbook - Page 52
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
2.4 Summary of accounting policies (continued)
•
Credit Union cannot sell or pledge the original asset other than as security to the eventual recipients.
•
Credit Union has to remit any cash flows it collects on beha lf of the eventual recipients without material delay.
In addition, Credit Union is not entitled to reinvest such cash flows, except for investments in cash or cash
equivalents including interest earned, during the period between the collection date and the date of required
remittance to the eventual recipients.
A transfer only qualifies for derecognition if either:
•
Credit Union has transferred substantially all the risks and rewards of the asset.
•
Credit Union has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Or
Credit Union considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its
entirety to an unrelated third-party and is able to exercise that ability unilaterally and without imposing additional
restrictions on the transfer.
When Credit Union has neither transferred nor retained substantially all the risks and rewards and has retained control of
the asset, the asset continues to be recognised only to the extent of Credit Union’s continuing involvement, in which case,
Credit Union also recognises an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Credit Union has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration Credit Union could be required to pay.
If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing
involvement is measured at the value Credit Union would be required to pay upon repurchase. In the case of a written put
option on an asset that is measured at fair value, the extent of the entity’s continuing involvement is limited to the lower
of the fair value of the transferred asset and the option exercise price.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognitio n of the original
liability and the recognition of a new liability. The difference between the carrying value of the original financial liabili ty
and the consideration paid is recognised in profit or loss.
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