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Expected Credit Loss: Initial Entry
WRITESR NOTE in 2nd box, change ECL Base from 250 to 200
The following four examples show the ledger entries that post for ECL for amortized cost and FVOCI.
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Amortized Cost | Acct # | Description | Local | Base | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Transaction 1 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-AC | 200.00 | 200.00 | |||
1/15/2017 | Book ECL Collective Level panel | 200.00 | 1.00 | 200.00 | 5001000902 | Impairment Expense for ECL-AC | 200.00 | 200.00 | ||
Fair Value-OCI | Acct # | Description | Local | Base | ||||||
Transaction 1 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-FV-OCI | 200.00 | 200.00 | |||
1/15/2017 | Book ECL Collective Level panel | 200.00 | 1.00 | 200.00 | 5001000902 | Impairment Expense for ECL-FV-OCI | 200.00 | 200.00 | ||
Amortized Cost | Acct # | Description | Local | Base | ||||||
Transaction 1 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-AC | 200.00 | 250.00 | |||
1/15/2017 | Book ECL Collective Level panel | 200.00 | 0.80 | 250.00 | 5001000902 | Impairment Expense for ECL-AC | 200.00 | 250.00 | ||
Fair Value-OCI | Acct # | Description | Local | Base | ||||||
Transaction 1 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-FV-OCI | 200.00 | 250.00 | |||
1/15/2017 | Book ECL Collective Level panel | 200.00 | 0.80 | 250.00 | 5001000902 | Impairment Expense for ECL-FV-OCI | 200.00 | 250.00 |
Expected Credit Loss: Increase
This example describes a scenario where the new ECL local amount is greater than the previous local amount. For domestic increases, the new local and base amounts are equal. For foreign increases, the new base amount is equal to the prior base amount plus the base delta.
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New Local Amount 300 Current Fx Rate .75
New Base Amount 383.33 (250 + (100 ecl increase/.75) = 383.33)
Amortized Cost | Acct # | Description | Local | Base | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Transaction 2 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-AC | (200.00) | (250.00) |
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2/15/2017 | Book ECL Collective Level panel | 300.00 | 0.75 | 5001000902 | Impairment Expense for ECL-AC | (200.00) | (250.00) | |||
ECL Prev | 200.00 | 250.00 | 1010010419 | Allowance for ECL-AC | 300.00 | 383.33 | ||||
Increase | 100.00 | 0.75 | 133.33 | 5001000902 | Impairment Expense for ECL-AC | 300.00 | 383.33 | |||
Total ECL | 300.00 | 383.33 |
Expected Credit Loss: Decrease
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ECL local amount reduction = 40%. New base amount = 230 (383.33 – (.40 *383.33 previous base))
Amortized Cost | Acct # | Description | Local | Base | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Transaction 3 | ECL Local | FX Rate | ECL Base | 1010010419 | Allowance for ECL-AC | (300.00) | (383.33) |
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3/15/2017 | Book ECL Collective Level panel | 180.00 | none | 240.00 | 5001000902 | Impairment Expense for ECL-AC | (300.00) | (383.33) | ||
ECL Prev | 300.00 | 383.33 | 1010010419 | Allowance for ECL-AC | 180.00 | 230.00 | ||||
5001000902 | Impairment Expense for ECL-AC | 180.00 | 230.00 |