IFRS 9 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Impairment: stage of each instrument, significant increase in credit risk, expected loss by scenarios or by probability of default, provision matrix and reconciliation of the loss allowance: Karvel receivable — 20X6 interest
File of an industrial group: hybrid contracts and separation, modification of an asset, assets credit-impaired from origination, loan commitments and maximum exposure period
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IFRS 9 workpaper
- Level
- Expert
- Estimated time
- ≈ 90 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Vestrel Industries SA (fictitious entity), an industrial group, closes its consolidated accounts on 31 December 20X6. Its central treasury holds a securitisation tranche and several loans, the group issued a bond indexed to copper, renegotiated a loan, acquired an already credit-impaired receivable and granted a revolving credit facility to its distributors. You prepare the analyses, calculations and entries of the file.
Assignment
Impairment of the modified loan, of the receivable acquired credit-impaired and of the revolving facility
Purpose of the workpaper
Describe the instrument, establish its stage (12-month, lifetime, credit-impaired) or the simplified approach, document the judgments on the significant increase in credit risk, the scenarios and the definition of default, measure the expected loss (scenarios, probability of default × loss given default × exposure, or provision matrix), compute the charge, reconcile the loss allowance and prepare the entries and the note. Rates, probabilities and forward-looking information are case data, never rules of the standard.
Questions of the file covered by this workpaper
- Assess the significant increase in credit risk of the modified loan Z and retain the measurement basis.
- Compute the weighted expected credit loss of loan Z and the loss allowance of the Karvel receivable acquired credit-impaired.
- Record the loss allowance of loan Z.
- Compute the 20X6 interest of the Karvel receivable at the credit-adjusted effective interest rate.
- Compute the net amortised cost of the Karvel receivable at the reporting date.
- Record the loss allowance of the Karvel receivable.
- Compute the expected loss of the credit facility (exposure × probability of default × loss given default).
- Record the loss allowance of the credit facility.
Documents in the file
Open the documents to pick out the relevant information.