Reporting the financial performance of a range of entities (C 1.5)

IFRS 9 Impairment of Financial Assets

Scope: Applies to most financial assets, excluding equity investments.
Expected Credit Losses: Focuses on the present value of potential cash shortfalls.
12-Month vs. Lifetime ECL: Determined by whether there's been a significant increase in credit risk since initial recognition.
Significant Increase in Credit Risk: Assessed based on available information, considering factors like internal credit ratings.
Low Credit Risk Assumption: If credit risk is low, it's assumed that there has been no significant increase.
Trade Receivables, Contract Assets, Leases: A simplified approach allows for direct calculation of lifetime ECL.
Impairment Loss Recognition:
- Amortized Cost: Loss allowance reduces the net carrying amount.
- FVOCI: Changes in ECL are recognized in profit or loss with an offsetting adjustment to OCI.
Credit-Impaired at Initial Recognition: Changes in lifetime ECL are recognized directly in profit or loss.
No Impairment for FVTPL: FVTPL already reflects credit risk.
Objective: To provide a more forward-looking approach to credit risk accounting, recognizing potential losses earlier.