ap30f-impairment-of-financial-assets.pdf

Keypoints:

1. The International Accounting Standards Board (IASB) is considering whether to introduce an expected credit loss (ECL) model for small and medium-sized entities (SMEs).
2. The ECL model was introduced in IFRS 9 for large financial institutions, but the IASB is concerned that it may not be suitable for SMEs.
3. The IASB has identified four alternatives for accounting for impairment of financial assets:
   • Alternative 1: Retain the simplified approach in the current Standard (IFRS for SMEs).
   • Alternative 2: Introduce an ECL model similar to IFRS 9, but with simplifications for SMEs.
   • Alternative 3: Use a best-estimate approach for impairment of financial assets.
   • Alternative 4: Retain the incurred loss model (current Standard) and consider introducing additional disclosure requirements.
4. The IASB is seeking feedback on whether the ECL model meets the relevance principle for SMEs.
5. If the ECL model does not meet the relevance principle, the IASB may retain the incurred loss model and consider introducing additional disclosure requirements.

Overall, the IASB is considering how to account for impairment of financial assets in the context of SMEs, with a focus on simplification and relevance.