CERTYNEX IFRS ACADEMY

An employee summarises in a memo the credit risk terms defined by IFRS 9. Which of these sentences is wrong?

A credit loss is the difference between the contractual cash flows due and the cash flows the entity expects to receive.

The expected credit loss is a weighted average of credit losses, with the risks of default as weights.

IFRS 9 defines default, and each entity must adopt that definition to identify its credit-impaired assets.

A financial asset is credit-impaired when events with a detrimental effect on its estimated future cash flows have occurred.