Collective/Group-Level ECL Examples for US GAAP

This section describes several examples of the ledger entries that result when you use collective/group-level Expected Credit Loss (ECL) with US GAAP.

Expected Credit Losses: Initial Entry

The following examples show the ledger entries that post for collective/group-level ECL, Held to Maturity.

Held to Maturity FX Rate of 1.00

 

Held To Maturity

 

 

 

 

Held To Maturity

 

 

 

Transaction 1

 

ECL Local

FX Rate

ECL Base

1/15/2017

Book ECL Collective Level panel

200.00

1.00

200.00

 

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

1010010419

Allowance for ECL-HTM

 

200.00

 

200.00

5001000902

Impairment Expense for ECL-HTM

200.00

 

200.00

 

Held to Maturity FX Rate of .80

 

Held To Maturity

 

 

 

 

Held To Maturity

 

 

 

Transaction 1

 

ECL Local

FX Rate

ECL Base

1/15/2017

Book ECL Collective Level panel

200.00

0.80

250.00

 

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

1010010419

Allowance for ECL-HTM

 

200.00

 

250.00

5001000902

Impairment Expense for ECL-HTM

200.00

 

250.00

 

Expected Credit Losses: ECL Increase

An ECL increase describes the situation where the new ECL local amount is greater than the previous local amount. For a domestic increase, the new local and base amounts are equal. For a foreign increase, the new base amount is equal to 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)

 

Held To Maturity

 

 

 

 

Held To Maturity

 

 

 

Transaction 2

 

ECL Local

FX Rate

ECL Base

2/15/2017

Book ECL Collective Level panel

300.00

0.75

 

 

ECL Prev

200.00

 

250.00

 

Increase

100.00

0.75

133.33

 

Total ECL

300.00

 

383.33

 

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

1010010419

Allowance for ECL-HTM

 

(200.00)

 

(250.00)

5001000902

Impairment Expense for ECL-HTM

(200.00)

 

(250.00)

 

1010010419

Allowance for ECL-HTM

 

300.00

 

383.33

5001000902

Impairment Expense for ECL-HTM

300.00

 

383.33

 

Expected Credit Losses: ECL Decrease

An ECL decrease describes the situation where the new ECL local amount is less than the previous local amount. For a domestic decrease, the new local and base amounts are equal. For a foreign decrease, 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))

 

Held To Maturity

 

 

 

 

Held To Maturity

 

 

 

Transaction 2

 

ECL Local

FX Rate

ECL Base

2/15/2017

Book ECL Collective Level panel

180.00

NO FX RATE

230.00

 

ECL Prev

300.00

 

383.33

 

 

 

 

 

 

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

Acct #

Description

Local

Dr



Cr

Base

Dr



Cr

1010010419

Allowance for ECL-HTM

 

(300.00)

 

(383.33)

5001000902

Impairment Expense for ECL-HTM

(300.00)

 

(383.33)

 

1010010419

Allowance for ECL-HTM

 

180.00

 

230.00

5001000902

Impairment Expense for ECL-HTM

180.00

 

230.00

 

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