Measurement of expected credit losses
Keywords: Mazars, Thailand, IFRS, IFRS IC, IFRS 9
20 May 2019
The IFRS IC referred back to paragraph B5.5.55 of IFRS 9, which states that a financial guarantee or other credit enhancement may only be included in the measurement of expected credit losses if it is both:
- part of the contractual terms of the asset in question; and
- not recognised separately.
Thus, the IFRS IC concluded that IFRS 9 is already sufficiently clear with regard to this situation. As the credit enhancement is already recognised in the balance sheet under the applicable standard, it shall not be taken into account when measuring expected credit losses on the asset to which it relates. Otherwise, this would run the risk of ‘double counting’ of these contractual rights.