To apply an expected credit loss adjustment to a lot when you use IFRS, you must have an accounting basis with the ECL Method set to Non-US Treatment with regulatory categories of FVOCI/AC. You can update the expected credit loss amount or the stage.
The panel displays lot detail information, such as quantity, trade date, settlement date, current cost, and allows you to specify information specific to expected credit losses. For your initial expected credit loss transaction on the lot, you can select the ECL Transition option if you need the ability to change the Purchased Impaired status.
Process Transactions with the Book ECL Asset-Level Panel
To book an asset-level ECL lot adjustment transaction to debt security lots when using IFRS:
In Accounting Center, in the left navigation pane, click Transactions > Adjustments > Expected Credit Loss Transactions > Book ECL Asset-Level.
You see the Book ECL Asset-Level panel.In the Entity Information section, specify the entity and accounting basis associated with the lot you are adjusting.
You see the entity base currency, and the regulatory category and ECL Method for the selected entity/basis grouping. Because you selected an entity with an accounting basis of IFRS, the Regulatory Category is AC or FVOCI, and the ECL Method is Non-US Treatment.In the Security Information by Option section, identify the security associated with the lot you are adjusting.
In the Accounting Information section, identify the lot you are adjusting and date criteria.
If you are entering an initial transaction, you can set ECL Transition to Yes to have the option to the change the Purchased Impaired value for your initial transaction.
The options available on the panel vary if you are adjusting a lot that uses the Non-US Treatment ECL method for IFRS with regulatory categories of FVOCI/AC or a lot that uses the US Treatment ECL method for US GAAP with regulatory categories of AFS/HTM.In the Credit Quality Stage Information section, if you adjust a lot using Non-US Treatment ECL Method (IFRS) with a regulatory category of FVOCI/AC, you can update the ECL Stage field value.
You can view the Prior ECL Stage value.In the Expected Credit Loss Information section,in the Local Loss Allowance box, specify the expected credit loss allowance.
In the Expected Credit Loss Activity section, you can review previous expected credit loss allowance information.
In the Other Information section,complete the remaining options on the Book ECL Asset-Level panel, as needed.
Click Submit.
The following table describes these options in detail. After you make a lot adjustment, you can view the adjustment activity on the Open Adjustments tab of the Cost object within the Position Viewer tool. Any subsequent ECL transactions to the same ECL position inserts an adjustment row in order to update the balance or other information. When you update the current balance or stage, the system moves the current value to a “previous” field on the adjustment row in order to store the prior value.
Book ECL Asset-Level Panel Example for IFRS
In the following figure, you use the Book ECL Asset-Level panel with an entity/basis for IFRS, where the ECL Method is Non-US Treatment and the Regulatory Category is AC (Amortized Cost). Under Credit Quality Stage Information, notice that you set ECL Stage to Stage 2.
Book ECL Asset-Level Panel Options
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In the Book ECL Asset-Level panel, you can apply expected credit losses (ECL) to debt security lots as an adjustment entry. Note that options may vary according to your selections. The options available on the panel vary if you are adjusting a lot that uses an ECL method of Non-US Treatment with regulatory categories of FVOCI/AC for use with IFRS or a lot that uses an ECL method of US Treatment with regulatory categories of AFS/HTM for use with US GAAP.
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