derecognizing

Derecognizing, or derecognition, is the formal removal of a previously recognized item, status, or entitlement from official records or authorities. It occurs when the item no longer meets the criteria for recognition, or when control or ownership has passed to another party. The term is used in accounting, finance, and international relations, among other fields, and can apply to assets, liabilities, or legal statuses.

In accounting and finance, derecognizing refers to removing a financial asset or liability from the balance sheet. Under applicable standards such as IFRS 9, a financial asset is derecognized when the contractual rights to cash flows expire, or when the asset is transferred and substantially all risks and rewards of ownership are transferred, without retaining control. A financial liability is derecognized when it is extinguished, canceled, or discharged, or when it is transferred and the transfer meets specific criteria. Any difference between the carrying amount and the consideration received is recognized in profit or loss. Derecognition decisions affect how gains or losses are reported and may involve disclosures related to ongoing involvement or off-balance sheet arrangements.

Beyond finance, derecognition can also refer to the withdrawal of recognition of a state, government, or organization by other states or bodies in international law or diplomacy. In such contexts, derecognition alters diplomatic or legal relationships but does not automatically change domestic status for individuals.

See also recognition; asset derecognition; liability derecognition.