The best 1 in overview – IFRS 9 Impairment requirements

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:

IFRS 9 Impairment requirements

* optional application to trade receivables and contract assets with a significant financing component, and to lease receivables

Read more

IAS 1 The best and proven breached loan accounting

IAS 1 The best and proven breached loan accounting – Loan agreements often include covenants that, if breached by the borrower, permit the lender to demand repayment before the loan’s normal maturity date. In response to a borrower’s request, lenders may decide to voluntarily waive some or all of the rights they acquire as a result of a breach.

Relevant IFRSsIAS 1 The best and proven breached loan accounting

IAS 1 Presentation of Financial Statements IAS 1 The best and proven breached loan accounting

IAS 10 Events after the Reporting Period IAS 1 The best and proven breached loan accounting

IFRS 7 Financial Instruments: Disclosures IAS 1 The best and proven breached loan accounting

Condition of the loan

Classification of a long-term loan payable as either a current … Read more

Individual or collective assessment for impairment – Which 1 is best varies per case

Individual or collective assessment for impairment - An entity should normally identify significant increases in credit risk and recognise lifetime ECLs