ECL - IFRS 9 (Expected credit Loss)


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As globally IFRS 9 has been implemented in order to look forward the future effect of expected credit loss. I have a question, before ECL implementation, ABC company has a clear policy to provide the provision of doubtful receivable on the basis of their age analysis and if there is noncollectable debt over 1 year age then general provision through comparison with opening balances, has been provided.

Now, suppose we are standing on reporting period of Jun-2019 and there is receivable over 1 year $10,000 (receivable over 1 year as at Jun-2018 was $6,000) that means there is charge for the year through general provision is (10-6) = $ 4,000 and let suppose ECL provision through considering the macro-economic factor is $ 16,000 (Closing Balance). suppose this is first time ECL is calcualted therefore there is no opening balances and the closing balances is the also the charge for the year through ECL.

How much provision should be accounted for in the books of account for the year ended Jun-2019???

Moreover, kindly also let us know whether there is need to calculate the general provision with the comparision of opening balances from ageing analysis in order to calculate the charge for the year through general provision or not?

Regards

Muhammad Umar
 
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Joined
Apr 16, 2020
Messages
2
Reaction score
0
Country
Pakistan
As globally IFRS 9 has been implemented in order to look forward the future effect of expected credit loss. I have a question, before ECL implementation, ABC company has a clear policy to provide the provision of doubtful receivable on the basis of their age analysis and if there is noncollectable debt over 1 year age then general provision through comparison with opening balances, has been provided.

Now, suppose we are standing on reporting period of Jun-2019 and there is receivable over 1 year $10,000 (receivable over 1 year as at Jun-2018 was $6,000) that means there is charge for the year through general provision is (10-6) = $ 4,000 and let suppose ECL provision through considering the macro-economic factor is $ 16,000 (Closing Balance). suppose this is first time ECL is calcualted therefore there is no opening balances and the closing balances is the also the charge for the year through ECL.

How much provision should be accounted for in the books of account for the year ended Jun-2019???

Moreover, kindly also let us know whether there is need to calculate the general provision with the comparision of opening balances from ageing analysis in order to calculate the charge for the year through general provision or not?

Regards

Muhammad Umar

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