Eagle's accounting solution incorporates Expected Credit Losses (ECL) into valuation processing for unrealized market gains/losses and unrealized F/X gains/losses on investments.
For IFRS, the allowance for expected credit loss is reported in a contra-asset account for investments classified with the Amortized Cost (AC) regulatory category. Valuation processing for these investments includes the ECL allowance amount when determining the unrealized market gain/loss and unrealized F/X gain loss on the position.
For investments classified with the regulatory category, Fair Value Other Comprehensive Income (FV-OCI), the allowance for ECL is reported in OCI rather than in a contra-asset account. As a result, valuation processing at the position level excludes the allowance for ECL when determining the unrealized market gain/loss and unrealized F/X gain loss for the investment. If the allowance for ECL is recorded in a currency not equal to base currency of the FV-OCI portfolio, an unrealized F/X gain/loss related to the allowance is recognized in a separate ledger account within OCI with an offset to unrealized F/X gain/loss recorded in income.
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