The following scenarios describe ledger entries for Sell transactions when you use asset-level expected credit loss (ECL) with a GAAP accounting basis.
The following notes apply to these Sell scenarios:
These Sell examples illustrate what should occur for a full sell.
For a partial sell across multiple lots, the expected credit losses are reduced proportional to the portion sold.
The close lot should reflect the ECL Stage of the targeted open.
Position-level ECL is reduced accordingly.
Sell for US GAAP – AFS
The entity holds an asset, par of 1,000 and a cost of $900, and expected credit losses of $30 applied to it.
Ledger entries follow for a lot with expected credit losses of $30 applied for a GAAP accounting basis with an AFS (Available for Sale) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
1310000100
COST OF INVESTMENTS-AFS
900
2002000100
INVESTMENT PAYABLE
900
5301000902
IMPAIRMENT EXPENSE FOR ECL-AFS
30
1310010419
ALLOWANCE FOR ECL-AFS
30
Sell with Realized Loss
Excusing any subsequent amortization, the lot is fully sold for $850 with the same amortized cost of $900.
The following transaction occurs.
Ledger Account
Ledger Acct Name
Dr
Cr
1310000100
COST OF INVESTMENTS-AFS
900
1002000100
INVESTMENT RECEIVABLE
850
3006000102
REALIZED LOSS ON INVESTMENTS
50
1310010419
ALLOWANCE FOR ECL-AFS
30
5301000902
IMPAIRMENT EXPENSE FOR ECL-AFS
30
Sell with Realized Gain
Excusing any subsequent amortization, the lot is fully sold for $950 with the same amortized cost of $900.
The following transaction occurs.
Ledger Account
Ledger Acct Name
Dr
Cr
1310000100
COST OF INVESTMENTS-AFS
900
1002000100
INVESTMENT RECEIVABLE
950
3006000101
REALIZED GAIN ON INVESTMENTS
50
1310010419
ALLOWANCE FOR ECL-AFS
30
5301000902
IMPAIRMENT EXPENSE FOR ECL-AFS
30
Sell for US GAAP – HTM
The entity holds an asset, par of 1,000 and a cost of $900, and expected credit losses of $30 applied to it.
Ledger entries follow for a lot with expected credit losses of $30 applied for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
1310000100
COST OF INVESTMENTS-HTM
900
2002000100
INVESTMENT PAYABLE
900
5501000902
IMPAIRMENT EXPENSE FOR ECL-HTM
30
1510010419
ALLOWANCE FOR ECL-HTM
30
Sell with Realized Loss
Excusing any subsequent amortization, the lot is fully sold for $850 with the same amortized cost of $900.
The following transaction occurs.
Ledger Account
Ledger Acct Name
Dr
Cr
1510000100
COST OF INVESTMENTS-HTM
900
1002000100
INVESTMENT RECEIVABLE
850
3006000102
REALIZED LOSS ON INVESTMENTS
50
1510010419
ALLOWANCE FOR ECL-HTM
30
5501000902
IMPAIRMENT EXPENSE FOR ECL-HTM
30
Sell with Realized Gain
Excusing any subsequent amortization, the lot is fully sold for $950 with the same amortized cost of $900.
The following transaction occurs.
Ledger Account
Ledger Acct Name
Dr
Cr
1510000100
COST OF INVESTMENTS-HTM
900
1002000100
INVESTMENT RECEIVABLE
950
3006000101
REALIZED GAIN ON INVESTMENTS
50
1510010419
ALLOWANCE FOR ECL-HTM
30
5501000902
IMPAIRMENT EXPENSE FOR ECL-HTM
30
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