This section describes several examples of the ledger entries that result when you use collective/group-level Expected Credit Loss (ECL) with US GAAP.
Expected Credit Losses: Initial Entry
The following examples show the ledger entries that post for collective/group-level ECL, Held to Maturity.
Held
...
Acct #
...
Description
...
Local
Dr
Cr
...
Base
Dr
...
to Maturity FX Rate of 1.00
Held To Maturity | ||||
|---|---|---|---|---|
Transaction 1 | ECL Local | FX Rate | ECL Base |
1010010419
Allowance for ECL-HTM
200.00
1/15/2017 | Book ECL Collective Level panel | 200.00 | 1.00 | 200.00 |
5001000902
200.00
200.00
Held To Maturity
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
|---|
1010010419 | Allowance for ECL |
FX Rate
ECL Base
1010010419
-HTM | 200.00 | 200.00 | ||
5001000902 | Impairment Expense for ECL-HTM | 200.00 |
200.00 |
Held to Maturity FX Rate of .80
Held To Maturity | ||||
|---|---|---|---|---|
Transaction 1 | ECL Local | 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-HTM | 200.00 | 250.00 | ||
5001000902 | Impairment Expense for ECL-HTM | 200.00 | 250.00 |
Expected Credit Losses: 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 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)
Held To Maturity |
|---|
Description
Local
Dr
Cr
Base
Dr
Cr
Transaction 2 | ECL Local | FX Rate | ECL Base |
1010010419
Allowance for ECL-HTM
2/15/2017 | Book ECL Collective Level panel | 300.00 | 0.75 | |
ECL Prev | 200.00 |
250.00 |
2/15/2017
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-HTM | (200.00) | (250.00) |
ECL Prev
5001000902 | Impairment Expense for ECL-HTM | (200.00) | (250.00) | ||
1010010419 | Allowance for ECL-HTM | 300.00 | 383 |
. |
33 | |
5001000902 | Impairment Expense for ECL-HTM |
300.00 | 383.33 |
Expected Credit Losses: 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 Amount 300
Previous Base Amount 383.33
...
ECL local amount reduction = 40%. New base amount = 230 (383.33 – (.40 *383.33 previous base))
Held To Maturity |
|---|
Acct #
Description
Local
Dr
Cr
Base
Dr
Transaction 2 | ECL Local | FX Rate | ECL Base |
1010010419
(300.00)
(383.33)
2/15/2017 | Book ECL Collective Level panel | 180.00 | NO FX RATE | 230.00 |
5001000902
ECL Prev | 300.00 | 383.33 | ||
Acct # | Description | Local Dr | Cr | Base Dr | Cr |
|---|---|---|---|---|---|
1010010419 | Allowance for ECL-HTM | (300.00) | (383.33) | ||
5001000902 | Impairment Expense for ECL |
-HTM | (300.00) | (383.33) | |||
1010010419 | Allowance for ECL-HTM | 180.00 | 230.00 | ||
5001000902 | Impairment Expense for ECL-HTM | 180.00 | 230.00 |