User ScenariosThis section describes several examples of the ledger entries that result when you use collective-level, or group-level, Expected Credit Loss (ECL) with US GAAP.
Expected Credit Losses
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: Initial entry
The following examples show the ledger entries that post for collective level ECL, Held to Maturity.
Expected Credit Losses
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: ECL Increase
An ECL increase describes the situation where the new ECL local amount is greater than the previous local amount. For a domestic increase, the new local and base amounts are equal. For a foreign increase, the new base amount will be is equal to the prior base amount plus the base delta.
Example:
Previous Local
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Amount 200
Previous Base
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amount 250
New Local
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Amount 300 Current Fx Rate .75
New Base
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Amount 383.33 (250 + (100 ecl increase/.75) = 383.33)
Expected Credit Losses
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: ECL Decrease
An ECL decrease describes the situation where the new ECL local amount is less than the previous local amount. For a domestic decrease, the new local and base amounts are equal. For a foreign decrease, the new base amount is calculated by taking the previous base amount and reducing it proportional to the local change, ignoring any FX rate.
Example:
Previous Local
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Amount 300
Previous Base
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Amount 383.33
New Local
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Amount 180
New Base
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Amount 230
ECL local amount reduction = 40%. New base amount = 230 (383.33 – (.40 *383.33 previous base)) 