The following scenarios describe ledger entries for Conversion/Buy/Receive transactions when you use asset-level expected credit loss (ECL) with a GAAP accounting basis.
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. .
Ledger Account
Ledger Acct Name
Dr
Cr
1010000100
COST OF INVESTMENTS-AFS
1,000
9999999992
CONVERSION COST
1,000
3003000100
ACCUMULATED UNDISTRIBUTED INCOME(LOSS)
30
1010010419
ALLOWANCE FOR ECL-AFS
30
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.
Ledger Account
Ledger Acct Name
Dr
Cr
1010000100
COST OF INVESTMENTS-HTM
1,000
9999999992
CONVERSION COST
1,000
3003000100
ACCUMULATED UNDISTRIBUTED INCOME(LOSS)
30
1010010419
ALLOWANCE FOR ECL-HTM
30
Receive/Buy for US GAAP – AFS (Purchased Impaired Asset)
The entity purchases an impaired lot at a cost of $1,000, with expected credit loss of $30. The entry is flagged as Purchased Impaired. Note that you can only enter expected credit losses on a GAAP/AFS Receive or Buy when it is flagged as Purchased Impaired.
The ledger entries follow for a GAAP accounting basis with an AFS (Available for Sale) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
1010000100
COST OF INVESTMENTS-AFS
1,030
2002000100
INVESTMENT PAYABLE
1,000
1010010419
ALLOWANCE FOR ECL-AFS
30
Receive/Buy for US GAAP – HTM
The ledger entries follow for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
1010000100
COST OF INVESTMENTS-HTM
1,000
2002000100
INVESTMENT PAYABLE
1,000
5001000902
IMPAIRMENT EXPENSE FOR ECL-HTM
30
1010010419
ALLOWANCE FOR ECL-HTM
30
Receive/Buy for US GAAP – HTM (Purchased Impaired Asset)
The entity purchases an impaired lot at a cost of $1,000, with expected credit losses of $30. The entry is flagged as Purchased Impaired.
The ledger entries follow for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.
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