Impairment of Financial Assets

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..... uarantee Contract which are not accounted for at FVTPL; and Finance Lease receivables (Net Investment in lease) that are within the cope of Ind AS 116; Trade Receivable or contract assets within the scope of Ind AS 115. If the asset is measured at FVTPL Fair Value of the asset is determined after considering all the risks and returns from the asset and it is accounted for in P L automatically and doesn t require any additional impairment testing. Impairment recognition not required if: - It is a financial liability/ Equity instrument. Financial assets measured at FVTPL. Financial asset (Investment in Equity instrument whether at FVTPL/FVTOCI) Irrevocable Financial asset that are DEBT INSTRUMENT measured at .....

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..... lowance based on LIFETIME ECL. This approach is mandatory for: Trade receivables Any contractual right to receive cash/another Financial Asset that results from transaction within IND AS 115. Purchased/ originated credit impaired financial asset approach: Applicable to financial asset which are credit impaired on Initial recognition (Lifetime ECL + Interest on Net carrying amount). Determining whether Credit Risk has increased significantly: Existing/ forecast adverse changes in business, financial or economic conditions expected to cause a significant change in the borrower's ability to meet its debt obligations. Actual or expected significant change in the operating results of the borrower (e.g.: e .....

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..... Total XXX Note:- Default Rate/Loss Rate = PV of expected loss (On the basis of observed historical sample data)/Gross carrying amount of financial asset*100 What are the 12months ECL? 12 Months ECL represents the lifetime cash shortfall that will affect, if a default occur within 12 months after reporting date, weighted by probability of default occurring. What is Life time ECL? For lifetime expected credit losses, an entity shall estimate the risk of a default occurring on the financial instruments during its expected life. - Manuals - Ready reckoner - Law and practice - Reference Guide - Quick Commentary Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.co .....

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