Conversion/Buy/Receive Transactions ECL Scenarios

The following scenarios describe ledger entries for Conversion/Buy/Receive transactions when you use asset-level expected credit loss (ECL). 

Conversion for IFRS – FVOCI

On 1 January 2020, the entity converts a lot at a cost of $1,000, with established expected credit losses of $30. The lot is flagged as Stage 1, which has no accounting impact but is stored on the lot.

The ledger entries follow for an IFRS accounting basis with an FVOCI (Fair Value - Other Comprehensive Income) regulatory category.

Conversion for IFRS – Amortized Cost

The ledger entries follow for an IFRS accounting basis with an AC (Amortized Cost) regulatory category.

Conversion for US GAAP - AFS

On 1 January 2020, the entity converts a lot at a cost of $1,000, with established expected credit losses of $30. The lot is flagged with Regulatory Intent  set to Not Likely Required to Sell, which has no accounting impact but is stored on the lot.

The ledger entries follow for a GAAP accounting basis with an AFS (Available for Sale) regulatory category. .

Conversion for US GAAP – AFS (Purchased Impaired Asset)

On 1 January 2020, an entity converts a lot at a cost of $1,000, and the converted lot is recognized as Purchased Impaired, that is, Purchased Impaired election on conversion = Yes. You input an expected credit loss amount of $30, which impacts the Amortized Cost of the lot.

The ledger entries follow for a GAAP accounting basis with an AFS (Available for Sale) regulatory category. 

Conversion for US GAAP – HTM

On 1 January 2020, the entity converts a lot at a cost of $1,000, with established expected credit losses of $30. Note that Regulatory Intent is not tracked on HTM positions.

The ledger entries follow for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.