IFRS 9 Financial Instruments includes revised guidance on the classification and measurement of financial instruments. The implementation of a business model approach and the Solely Payments of Principal and Interest (SPPI) criterion may require judgment to ensure that financial assets are classified into the appropriate category.
Deciding whether the SPPI criterion is met will require assessment of contractual provisions that do or may change the timing or amount of contractual cashflows. The expected credit loss model for the recognition and measurement of impairment addresses the concerns about ‘too little, too late’ provisioning under the old standard and accelerates the recognition of losses by requiring provisions to cover both already-incurred losses and some losses expected in the future. However, the calculation of expected credit losses can be complex and requires time, effort and the availability of granular data.
In this session of the IFRS Series we shall be describing the criteria for classification and measurement bases of financial instruments, delving into the expected credit loss model and approaches adopted to calculate such impairment provisions in practice, and discussing the disclosure requirements emanating from IFRS 7 Financial Instrument Disclosures.
The session is aimed for accounting professionals and financial controllers.
By the end of the session participants would be knowledgeable on the requirements of IFRS 9, including approaches adopted in practice in calculating expected credit losses under the new impairment model.
Basic knowledge on financial reporting is recommended.
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