1.Apply derecognition criteria of IFRS 9 and U.S. GAAP to Company B's situation below.

Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors.The historic default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank.The bank may subsequently sell or pledge these receivables.

Under IFRS, should Company B derecognize thisportfolioof short-term receivables?Why?(ApplyIFRS 9 Financial Instruments.pdf- Appendix B3.2.1 through B3.2.5)

Under U.S. GAAP, should Company B derecognize thisportfolioof short-term receivables?Why?(Apply ASC 860-10-40-5: Pay attention to example 1 of "Effective control".Derecognition criteria of U.S. GAAP are also discussed inIntermediate Accountingbook, Chapter 7, Secured Borrowing vs. Sale)

A Big Four accounting firm's website also has a publication about IFRS-US GAAP differences including derecognition criteria differences that are summarized on page 4 ofChapter 5 Financial Instruments-3.doc.