CERTYNEX IFRS ACADEMY

The loss allowance on Vrimane's receivables must increase by 45,000 at the 2025 reporting date, based on the latest default data. The finance director proposes to spread the increase over three years 'to smooth the effect'. What is the conclusion?

The increase should only be recognised when defaults actually occur.

The loss allowance is adjusted in 2025 and the whole effect goes through 2025 profit or loss.

The increase must be charged to opening 2025 equity, bypassing profit or loss.

Spreading over three years is acceptable if disclosed in the notes.