This section describes several examples of the ledger entries that result when you use collective-level, or /group-level, Expected Credit Loss (ECL) with IFRS.
Expected Credit Loss: Initial Entry
The following four examples show the ledger entries that post for ECL for amortized cost and FVOCI.
Amortized Cost
...
Acct #
...
Description
...
Local
...
with FX Rate of 1.00
Amortized Cost | ||||
---|---|---|---|---|
Transaction 1 | ECL Local | FX Rate | ECL Base |
1010010419
200.00
200.00
1/15/2017 | Book ECL Collective Level panel | 200.00 | 1.00 | 200.00 |
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-AC | 200.00 | 200.00 | ||
5001000902 | Impairment Expense for ECL-AC | 200.00 | 200.00 |
Fair Value-OCI
...
Acct #
...
Description
...
Local
...
Base
with FX Rate of 1.00
Fair Value-OCI | ||||
---|---|---|---|---|
Transaction 1 | ECL Local | FX Rate | ECL Base |
1010010419
Allowance for ECL-FV-OCI
200.00
1/15/2017 | Book ECL Collective Level panel | 200.00 | 1.00 | 200.00 |
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-FV-OCI | 200.00 | 200.00 | ||
5001000902 | Impairment Expense for ECL-FV-OCI | 200.00 | 200.00 |
Amortized Cost
...
Acct #
...
Description
...
Local
...
with FX Rate of .80
Amortized Cost | ||||
---|---|---|---|---|
Transaction 1 |
ECL Local |
FX Rate | ECL Base |
1010010419
200.00
250.00
1/15/2017 | Book ECL Collective Level panel | 200.00 | 0.80 | 250.00 |
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-AC | 200.00 | 250.00 | ||
5001000902 | Impairment Expense for ECL-AC | 200.00 | 250.00 |
Fair Value-OCI
...
Acct #
...
Description
...
Local
...
with FX Rate of .80
Fair Value-OCI | ||||
---|---|---|---|---|
Transaction 1 |
ECL Local |
FX Rate
ECL Base
1010010419
Allowance for ECL-FV-OCI
200.00
FX Rate | ECL Base | |||
1/15/2017 | Book ECL Collective Level panel | 200.00 | 0.80 | 250.00 |
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-FV-OCI | 200.00 | 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.
...
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)
2/15/2017
Amortized Cost | ||||
---|---|---|---|---|
Transaction 2 | ECL Local | FX Rate | ECL Base | |
2/15/2017 | Book ECL Collective Level panel | 300.00 | 0.75 | |
ECL Prev | 200.00 | 250.00 | ||
Increase | 100.00 | 0.75 | 133.33 | |
Total ECL | 300.00 |
0.75
5001000902
383.33 |
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-AC | (200.00) | (250.00) | ||
5001000902 | Impairment Expense for ECL |
-AC | (200.00) | (250.00) | |||
1010010419 | Allowance for ECL-AC | 300.00 | 383 |
.33 | |
5001000902 | Impairment Expense for ECL-AC |
300.00 | 383.33 | ||||
Expected Credit Loss: Decrease
This example describes a scenario where the new ECL local amount is less than the previous local amount. For domestic decreases, the new local and base amounts are equal. For foreign decreases, the new base amount is calculated by taking the previous base amount and reducing it proportional to the local change, ignoring any FX rate.
...
Previous Local Amount 300
Previous Base Amount 383.33
New Local Amount 180
New Base Amount 230
ECL local amount reduction = 40%. New base amount = 230 (383.33 – (.40 *383.33 previous base))
Amortized Cost
Acct #
Description
Local
Base
Amortized Cost | ||||
---|---|---|---|---|
Transaction 3 | ECL Local | FX Rate | ECL Base |
1010010419
Allowance for ECL-AC
(383.33)
3/15/2017 | Book ECL Collective Level panel | 180.00 | none | 230.00 |
ECL Prev | 300.00 |
5001000902
383.33 | ||||
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
---|---|---|---|---|---|
1010010419 | Allowance for ECL-AC | (300.00) | (383.33) | ||
5001000902 | Impairment Expense for ECL |
-AC | (300.00) | (383.33) | |||
1010010419 | Allowance for ECL-AC | 180.00 | 230.00 | ||
5001000902 | Impairment Expense for ECL-AC | 180.00 | 230.00 |