Cor pora te rep or ti n g

(1 mark) 
 
(IFRS 9 application: 4 marks max) 
 
(Part b: 6 marks max) 
(c) 
IFRS 9 
Financial Instruments 
says that an entity has transferred a financial asset if it 
has transferred the contractual rights to receive the cash flows of the asset. 
(1 mark) 
If an entity has transferred an asset, it must evaluate the extent to which it has 
retained the significant risks and rewards of ownership. 
(1 mark) 
If the entity transfers substantially all the risks and rewards of ownership of the 
financial asset, the entity must derecognise the financial asset.
 (1 
mark) 
 (IFRS 9 knowledge: 2 marks max) 
The shares have been legally transferred to Noise, who is entitled to any dividends 
arising from the investment. 
(1 mark) 
Music does not benefit from future share price increases meaning that this key 
reward of ownership has been transferred to Noise. 
(1 mark) 

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