CERTYNEX IFRS ACADEMY

Dune SA acquires a loan that is already credit-impaired at the acquisition date (purchased or originated credit-impaired asset). How does it treat the effect of credit risk on this loan?

It applies the original effective interest rate to the gross amount and takes no account of changes in expected losses.

It applies a credit-adjusted effective interest rate and recognises in the loss allowance the cumulative changes in expected losses.

It recognises a loss allowance equal to 12-month losses from acquisition, as for a stage 1 loan.

It recognises at acquisition a loss allowance equal to lifetime losses, in addition to the credit-adjusted effective interest rate.