Impairment of financial assetsImpairment of financial assets

Impairment of financial assets

B8D An entity shall apply the impairment requirements in Section 5.5 of AASB 9 retrospectively subject to paragraphs 7.2.15 and 7.2.18–7.2.20 of that Standard.

B8E At the date of transition to Australian Accounting Standards, an entity shall use reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised (or for loan commitments and financial guarantee contracts the date that the entity became a party to the irrevocable commitment in accordance with paragraph 5.5.6 of AASB 9) and compare that to the credit risk at the date of transition to Australian Accounting Standards (also see paragraphs B7.2.2–B7.2.3 of AASB 9).

B8F When determining whether there has been a significant increase in credit risk since initial recognition, an entity may apply:

(a) the requirements in paragraph 5.5.10 and B5.5.27–B5.5.29 of AASB 9; and

(b) the rebuttable presumption in paragraph 5.5.11 of AASB 9 for contractual payments that are more than 30 days past due if an entity will apply the impairment requirements by identifying significant increases in credit risk since initial recognition for those financial instruments on the basis of past due information.

B8G If, at the date of transition to Australian Accounting Standards, determining whether there has been a significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, an entity shall recognise a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date, in which case paragraph B8E(a) applies).