User Scenarios
Expected Credit Loss – Initial entry
Below are the examples that show the ledger entries that will post for ECL for amortized cost and FVOCI.
Expected Credit Loss – Writeup
Writeup describes the situation where the new ECL local amount is greater than the previous local amount. For domestic writeups the new local and base amounts will be equal. For foreign writeups, the new base amount will equal the prior base amount plus the base delta.
Example: Previous Local Amount 200
Previous Base amount 250
New Local Amount 300 Current Fx Rate .75
New Base Amount 383.33 (250 + (100 ecl increase/.75) = 383.33)
Expected Credit Loss – Writedown
Writedown describes the situation where the new ECL local amount is less than the previous local amount. For domestic writedowns the new local and base amounts will be equal. For foreign writedowns, 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
New Local Amount 180
New Base Amount 230
ECL local amount reduction = 40%. New base amount = 230 (383.33 – (.40 *383.33 previous base))
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