IFRS 9 Impairment requirements
forward-looking information to recognise expected credit losses for all debt-type financial assets
Under IFRS 9 Impairment requirements, recognition of impairment no longer depends on a reporting entity first identifying a credit loss event.
IFRS 9 instead uses more forward-looking information to recognise expected credit losses for all debt-type financial assets that are not measured at fair value through profit or loss.
IFRS 9 requires an entity to recognise a loss allowance for expected credit losses on:
- debt instruments measured at amortised cost
- debt instruments measured at fair value through other comprehensive income
- lease receivables
- contract assets (as defined in IFRS 15 ‘Revenue from Contracts with Customers’)
- loan commitments that are not measured at fair value through profit or loss
- financial guarantee contracts (except those accounted for as insurance contracts).
IFRS 9 requires an expected loss allowance to be estimated for each of these types of asset or exposure. However, the Standard specifies three different approaches depending on the type of asset or exposure:
* optional application to trade receivables and contract assets with a significant financing component, and to lease receivables