The following scenarios describe ledger entries for paydowns when you use asset-level expected credit loss (ECL). 

Paydown for IFRS – FVOCI

The entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900 and a factor of 1. The lot subsequently has an expected credit losses of $30 applied to it.

10% of the position is paid down with a gain of $10. Because 10% of the position is being closed, $3 of ECL is proportionally reduced, the gain becomes $13
Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Realized Gain/Loss.

Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Accelerated Amortization.

Paydown for IFRS – AC

The entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900 and a factor of 1. The lot subsequently has an expected credit losses of $30 applied to it.

10% of the position is paid down with a gain of $10. Because 10% of the position is being closed, $3 of ECL is proportionally reduced, the gain becomes $13
Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Realized Gain/Loss.

Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Accelerated Amortization.

Paydown for US GAAP – AFS

The entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900 and a factor of 1. The lot subsequently has an expected credit losses of $30 applied to it.

10% of the position is paid down with a gain of $10. Because 10% of the position is being closed, $3 of ECL is proportionally reduced. Note that the gain/loss is not impacted by the reduction in ECL.
Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Realized Gain/Loss.

Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Accelerated Amortization.

Paydown for US GAAP – HTM

The entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900 and a factor of 1. The lot subsequently has an expected credit losses of $30 applied to it.

Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Realized Gain/Loss.

Principal Loss on Paydown Processing Flag (Tag 2925) on accounting basis = Accelerated Amortization.

Impairments ECL Scenarios

The following scenarios describe ledger entries for impairments when you use asset-level expected credit loss (ECL). 

Impairment for IFRS – FVOCI

On 1 January 2020, the entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900. The lot subsequently has an expected credit losses of $30 applied to it.

1. This security is deemed to be impaired, the user books a writedown transaction which will update the Stage to 3. The new amortized cost is $880 so the writedown is for ($900 - $880 = $20). The following ledger entries will be booked:

1. This security is deemed to be impaired, the user books a writedown transaction which will update the Stage to 3. The new amortized cost is $850 so the writedown is for ($900 - $850 = $50). The following ledger entries will be booked:

Expected Credit Loss offsets to Cost until no ECL remains, any remaining amount offsets to Realized Losses – Impairments

Impairment for IFRS – AC

On 1 January 2020, the entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900. The lot subsequently has an expected credit losses of $30 applied to it.

1. This security is deemed to be impaired, the user books a writedown transaction which will update the stage to 3. The new amortized cost is $880 so the writedown is for ($900 - $880 = $20). The following ledger entries will be booked:

1. This security is deemed to be impaired, the user books a writedown transaction which will update the stage to 3. The new amortized cost is $850 so the writedown is for ($900 - $850 = $50). The following ledger entries will be booked:

Note: the Expected Credit Loss offsets to Cost until no ECL remains, any remaining amount offsets to Realized Losses – Impairments

Impairment for GAAP – AFS

On 1 January 2020, the entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900. The lot subsequently has an expected credit losses of $30 and Non-Credit loss of $40 applied to it (i.e. the present value is deemed to be $870, the market value is $830).

1. This security is deemed to be impaired, the user books a writedown transaction against the lot. The new amortized cost is $880 so the writedown is for ($900 - $820 = $20). The following ledger entries will be booked:

Non-credit balance should be reversed completely.

1. This security is deemed to be impaired, the user books a writedown transaction against the lot. The new amortized cost is $850 so the writedown is for ($900 - $850 = $50). The following ledger entries will be booked:

   Ledger Account	Ledger Acct Name	Dr	Cr
   1310000100	COST OF INVESTMENTS-AFS		50
   1310010419	ALLOWANCE FOR ECL-AFS	30
   4304000303	REALIZED LOSSES – IMPAIRMENTS-AFS	20
   3306000102	REALIZED LOSSES-AFS-FROM OCI		20
   3303000302	UNREALIZED LOSSES- AFS -OCI	20
   1310010600	NON-CREDIT IMPAIRMENT - AFS		40
   3305000400	NON-CREDIT IMPAIRMENT - OCI - AFS	40

   
   Non-credit balance should be reversed completely.
   In each case, the Expected Credit Loss offsets to Cost until no ECL remains, any remaining amount offsets to Realized Losses – Impairments.

   Impairment for GAAP – HTM

   On 1 January 2020, the entity purchases one lot of a loan-backed security, par of 1,000 and a cost of $900. The lot subsequently has an expected credit losses of $30 applied to it.

   Ledger Account	Ledger Acct Name	Dr	Cr
   1510000100	COST OF INVESTMENTS-HTM	900
   2002000100	INVESTMENT PAYABLE		900
   5501000902	IMPAIRMENT EXPENSE FOR ECL-HTM	30
   1510010419	ALLOWANCE FOR ECL-HTM		30

2. This security is deemed to be impaired, the user books a writedown transaction against the lot. The new amortized cost is $880 so the writedown is for ($900 - $880 = $20). The following ledger entries will be booked:

1. This security is deemed to be impaired, the user books a writedown transaction against the lot. The new amortized cost is $850 so the writedown is for ($900 - $850 = $50). The following ledger entries will be booked: