In this video, Saket introduces the three key approaches to assessing the expected credit loss - the first is the general approach, which requires an entity to track changes in credit risk, the second is the simplified approach, which does not require an entity to track the changes, but rather requires the entity to recognise a loss allowance based on lifetime expected credit losses at each reporting date from obligation, and lastly the purchased/originated credit impaired approach.
Key learning objectives:
What is the scope of IFRS 9 impairment?
Identify and explain the general, simplified and credit-impaired approaches
What indicators does IFRS 9 use to track significant increases in credit risk and default?
Discuss the reporting rules for loan commitments and financial guarantees