How to recycle own credit risk on derecognition
Records the transfer of cumulative gains or losses in OCI related to own credit risk to retained earnings upon the derecognition of a financial liability designated at FVTPL.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accumulated OCI - Own Credit Risk | Equity | 1,500.00 | - |
| Retained Earnings | Equity | - | 1,500.00 |
💡 Accountant's Note
IFRS 9.5.7.8 specifies that amounts presented in OCI relating to changes in the credit risk of a liability designated at FVTPL are not subsequently transferred to profit or loss. However, the entity may transfer the cumulative gain or loss within equity (to retained earnings) when the liability is derecognized.
Practitioner & Systems Framework
💻 ERP Architecture
Requires a manual journal entry between equity reserves; most sub-ledgers do not automate the recycling of OCI to RE.
⚠️ Audit Flags
Full derecognition of a liability previously designated at FVTPL with an OCI credit risk component.
📄 Required Documentation
Derecognition assessment, valuation report identifying the specific credit risk component vs. market risk.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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