Follow Us

Follow us on Twitter  Follow us on LinkedIn

Article List:

 

06 November 2009

IASB proposals on impairment of financial assets – IAS 39


The exposure draft proposes requirements for how to include credit loss expectations in the amortised cost measurement of financial assets. The proposals form part of a project to replace IAS 39 with a new standard.

The IASB published an exposure draft on the amortised cost measurement and impairment of financial instruments. The Exposure Draft proposes requirements for how to include credit loss expectations in the amortised cost measurement of financial assets. The proposals form the second part of a three-part project to replace IAS 39 with a new standard, to be known as IFRS 9 Financial Instruments.

 

The IASB is proposing to move from the current incurred loss impairment method to

one based on expected losses.

 

The proposed expected loss model requires an entity:

Ø       to determine the expected credit losses on a financial asset when that asset is first obtained

Ø       to recognise contractual interest revenue, less the initial expected credit losses, over

Ø       the life of the instrument

Ø       to build up a provision over the life of the instrument for the expected credit losses

Ø       to reassess the expected credit loss each period

Ø       to recognise immediately the effects of any changes in credit loss expectations.

 

Following the consultation the IASB will establish an expert advisory panel that will:

Ø       address how the proposals might be applied operationally;

Ø       advise the IASB on the guidance that should be included in any final requirements; and

Ø       facilitate field testing of the proposals

 

Proposals on the classification and measurement of financial instruments were published in July, with a final standard expected shortly, while proposals on hedge accounting continue to be developed.

 

The ED is open for public comment until 30 June 2010.

 

Press release

Summary document

Exposure Draft

 



© IASB - International Accounting Standards Board

Documents associated with this article

IASB ED on Financial Instruments - Amortised Cost and Impairment IAS 39.pdf


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment