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Explanation: Securities, yes; but not "equities", rather "bonds" (and similar debt instruments).
What I believe "adquiridos" refers to here is when the company "buys back", for example, its own bonds or other debt instruments (pasivos financieros), hence "repurchased" (see example below, "Repurchase of a debt instrument"). The term "recolocarlos" refers to "reselling them".
I do not believe you need to account for the "propios" in the English term as it's implicit that it's the entity's own liabilities, not some third party's.
The text in question appears to be derived from IFRS 9, "Financial Instruments".
Check the similarity of the texts below:
"La empresa dará de baja un pasivo financiero cuando la obligación se haya extinguido. También dará de baja los pasivos financieros propios que adquiera, aunque sea con la intención de recolocarlos en el futuro.
Si se produjese un intercambio de instrumentos de deuda entre un prestamista y un prestatario, siempre que éstos tengan condiciones sustancialmente diferentes, se registrará la baja del pasivo financiero original y se reconocerá el nuevo pasivo financiero que surja. De la misma forma se registrará una modificación sustancial de las condiciones actuales de un pasivo financiero." https://www.contabilidadtk.es/pasivos-financieros.html
"Derecognition of financial liabilities A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires. [IFRS 9, paragraph 3.3.1] Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this transaction is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability." https://www.iasplus.com/en/standards/ifrs/ifrs9
"Extinguishment of a financial liability Derecognition resulting from extinguishment of a financial liability Another instance when entity [sic] derecognises a financial liability (or a part of a financial liability) is when it is extinguished—i.e. when the obligation specified in the contract is discharged, cancelled or expires (IFRS 9.3.3.1).
A financial liability (or part of it) is extinguished when the debtor either (IFRS 9 B3.3.1):
discharges the liability (or part of it) by paying the creditor, normally with cash, other financial assets, goods or services; or is legally released from primary responsibility for the liability (or part of it) either by process of law or by the creditor. … Repurchase of a debt instrument If an issuer of a debt instrument repurchases that instrument, the debt is extinguished even if the issuer is a market maker in that instrument or intends to resell it in the near term (IFRS 9.B3.3.2)." https://ifrscommunity.com/knowledge-base/derecognition-of-fi...
This means the company's own bonds that it has redeemed. It is clearly being required to retire them, even if it plans to resell them at some future date.
If you're reading those financial statements and seeing equity as part of the liabilities, then what you are demonstrating is simply a basic misunderstanding of accounting. There are three distinct components of the balance sheet: Assets, Liabilities, and Equity.
Just go to the site you quoted first, Investopedia, and look at its entry on the accounting equation:
I am going back to my statement that equity is a liability. Please look at this example of balance sheet; as in all balance sheets, equity is classified as a liability.
"Then you say debt recall. Financial concepts are precise." Yes, financial concepts are precise, but debt recall is something else entirely. And of course, debts can only be recalled by creditors, not debtors. If a company repurchases its own bonds (i.e., which it issues as a debtor), it isn't "recalling its debts," it's doing the opposite, i.e., paying them off, hence they are derecognized as liabilities in the accounts.
I don't know why you're digging your heels in here, as you can easily find this information online. Companies very clearly do buy back their own debt instruments, bonds specifically:
"On occasion, a company will buy back its own bonds before the maturity date, recognizing a gain or loss on the repurchase. Generally, this buyback is done with the intent to retire the bonds and get the liability off the company’s balance sheet. However, on rare occasions, it is conceivable a company could buy back bonds with the intent to hold those bonds for a time and then reissue them." https://issuu.com/uacpa/docs/jan2021_-the_journal_entry_sm_8...
"A bond repurchase, or bond buyback, refers to the process whereby the issuer approaches the open market and repurchases its bonds from holders. If the bonds are trading at less than their par value, issuers can use this tool opportunistically to acquire debt..." https://issuu.com/uacpa/docs/jan2021_-the_journal_entry_sm_8...
I can only assume that you don't understand the difference between stocks and bonds.
No, if you look at the texts that this is derived from, they clearly refer to financial debt instruments like bonds, commercial paper, etc., which an entity issues/sells and which are then extinguished contractually by terms or by the entity repurchasing or exchanging them. A company's own shares aren't among its financial liabilities. You can check the links in my entry.
The concept of equity as company debt is wrong. Equity is separate from assets and liabilities in accounting, rather it is the third value in the accounting equation (assets = liabilities + equity). While it is true that it is the amount an entity would have to repay to its owners/shareholders, that amount depends on its assets and liabilities. It would be just as illogical for the shareholder's equity to appear as a liability on an entity's financial statements as it would be for an asset to appear as a liability.
If an entity is overstretched, i.e., has more liabilities than assets, then it has negative shareholder equity. So how much would it have to repay its shareholders then?
I'm far from being a financial or economic expert myself, but it's weird to me that as a self-professed "economic geek" you don't seem to understand this basic accounting concept. It's only out of respect for your avowed area of expertise that I posted my comment as neutral; in actual fact, I couldn't disagree with it more.
According to the following link, derecognition refers to the elimination of the liability from the balance sheet, due to it has been extinguished. As for "recolocarlos", it seems to me that it refers to renewing the instrument again.
From the answers I assume that the liabilities are expenses or another form of debt. The term 'de-recognition' is unusual as it infers that the liabilities are cast aside or left unattended for a time. I saw the term 'reallocation of liabilities' which nearly equates a de-recognition. The reallocation or de-recognition is probably temporary, since in some cases loan payments could be deferred for a time period of 3 months or more, as was the case in an old-fashioned student loan which matured before repayment was compulsory.
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Answers
1 hr confidence: peer agreement (net): +2
own financial liabilities acquired
Explanation: Dejo ejemplo
Example sentence(s):
it also derecognises own financial liabilities acquired even when the intention is to resell them in the future
Rodrigo Yanez Chile Local time: 12:30 Works in field Native speaker of: Spanish
2 hrs confidence: peer agreement (net): +1
direct 'personal' financial liabilities assumed
Explanation: < > "recolocarlos" - unless posted as a separate question, 'reallocate' (re-position or re-enter them in the accounts).
The ProZ SPA/GER explanation kicks off with: '..likely to mean such liabilities as result directly out of legal dealings, as opposed - for instance - to insurance claims that, as it were, arise 'indrectly'-only, namely out of legal transactions (e.g. contracts of insurance).' ?
note the previous question:
PASIVOS FINANCIEROS
Se registran como pasivos financieros aquellos instrumentos emitidos, incurridos o asumidos, que suponen para la Sociedad una *obligación contractual directoa o indirecta* atendiento a su realidad económica, de entregar efectivo u otro activo financiero o intercambiar activos o pasivos financieros con terceros en *condiciones desfavorables*.
Baja de pasivos financieros
Los pasivos financieros se dan de baja cuando se ha extinguido la obligación inherente a los mismos. Los **pasivos financieros propios adquiridos** se darán de baja, aún cuando sea con la intención de recolocarlos en el futuro.
Example sentence(s):
ProZ: pasivos financieros propios adquiridos German translation: selbst eingegangene Verbindlichkeiten ('self-induced ...Und "financieros" kannst Du unter den Tisch fallen lassen > leave out the financials' liabilities') Wolfgang Hummel (German Lawyer)
The term accrued liabilities refers to any expenses a business has yet to pay after an accounting period.
Adrian MM. Austria Specializes in field Native speaker of: English PRO pts in category: 75
9 hrs confidence: peer agreement (net): +2
repurchased financial liabilities
Explanation: Securities, yes; but not "equities", rather "bonds" (and similar debt instruments).
What I believe "adquiridos" refers to here is when the company "buys back", for example, its own bonds or other debt instruments (pasivos financieros), hence "repurchased" (see example below, "Repurchase of a debt instrument"). The term "recolocarlos" refers to "reselling them".
I do not believe you need to account for the "propios" in the English term as it's implicit that it's the entity's own liabilities, not some third party's.
The text in question appears to be derived from IFRS 9, "Financial Instruments".
Check the similarity of the texts below:
"La empresa dará de baja un pasivo financiero cuando la obligación se haya extinguido. También dará de baja los pasivos financieros propios que adquiera, aunque sea con la intención de recolocarlos en el futuro.
Si se produjese un intercambio de instrumentos de deuda entre un prestamista y un prestatario, siempre que éstos tengan condiciones sustancialmente diferentes, se registrará la baja del pasivo financiero original y se reconocerá el nuevo pasivo financiero que surja. De la misma forma se registrará una modificación sustancial de las condiciones actuales de un pasivo financiero." https://www.contabilidadtk.es/pasivos-financieros.html
"Derecognition of financial liabilities A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires. [IFRS 9, paragraph 3.3.1] Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this transaction is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability." https://www.iasplus.com/en/standards/ifrs/ifrs9
"Extinguishment of a financial liability Derecognition resulting from extinguishment of a financial liability Another instance when entity [sic] derecognises a financial liability (or a part of a financial liability) is when it is extinguished—i.e. when the obligation specified in the contract is discharged, cancelled or expires (IFRS 9.3.3.1).
A financial liability (or part of it) is extinguished when the debtor either (IFRS 9 B3.3.1):
discharges the liability (or part of it) by paying the creditor, normally with cash, other financial assets, goods or services; or is legally released from primary responsibility for the liability (or part of it) either by process of law or by the creditor. … Repurchase of a debt instrument If an issuer of a debt instrument repurchases that instrument, the debt is extinguished even if the issuer is a market maker in that instrument or intends to resell it in the near term (IFRS 9.B3.3.2)." https://ifrscommunity.com/knowledge-base/derecognition-of-fi...
Robert Carter Mexico Local time: 10:30 Works in field Native speaker of: English PRO pts in category: 60
peer agreement (net): +2
