Page 189 - Bank-Muamalat-AR2020

187
Our Performance Sustainability Statement Governance Our Numbers Other Information

2. SIGNIFICANT ACCOuNTING POLICIES (CONT’D.)
2.3 Summary of significant accounting policies (cont’d.)

(b) Financial assets (cont’d.)
(ii) Derecognition
A financial asset is derecognised when:

• The rights to receive cash flows from asset have expired.
• The Group and the Bank have transferred their rights to receive cash flows from the asset or have
assumed an obligation to pay the received cash flows in full without material delay to a third party
under a “pass through” arrangement; and either:
- The Group and the Bank have transferred substantially all the risks and rewards of the asset; or

- The Group and the Bank have neither transferred nor retained substantially all the risks and
rewards of the assets, but has transferred control of the financial asset.

When the Group and the Bank have transferred their rights to receive cash flows from a financial asset or have
entered into a pass through arrangement, and have neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the financial asset, the financial asset is recognised to the
extent of the Group’s and the Bank’s continuing involvement in the financial asset. In that case, the Group and
the Bank also recognise an associated liability. The transferred asset and associated liability are measured on a
basis that reflects the rights and obligations that the Group and the Bank have retained.
(iii) Impairment of financial assets
The MFRS 9 impairment requirements are based on an Expected Credit Loss (“ECL”) model. The ECL model
applies to financial assets measured at amortised cost or at FVOCI (with recycling to profit or loss), irrevocable
financing commitments and financial guarantee contracts, and financing of customers and debt instruments
held by the Group and the Bank. The ECL model also applies to contract assets under MFRS 15 Revenue from
Contracts with Customers and lease receivables under MFRS 117 Leases.