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Impairment of financial instruments under IFRS 9
This publication discusses the new expected credit loss model as set out in IFRS 9 and also describes the new credit risk disclosures under the expected credit loss model, as set out in IFRS 7.
In July 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9 Financial Instruments (IFRS 9, or the standard), bringing together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 and all previous versions of IFRS 9.
The IASB has sought to address a key concern that arose as a result of the financial crisis, that the incurred loss model in IAS 39 contributed to the delayed recognition of credit losses. As such, it has introduced a forward-looking expected credit loss model. The ECL requirements and application guidance in the standard are accompanied by 14 Illustrative Examples.
This publication discusses the new expected credit loss model as set out in the final version of IFRS 9 and also describes the new credit risk disclosures in relation to the expected credit loss model, as set out in IFRS 7 Financial Instruments: Disclosures