Presenting impairment

Learning objectives

• Present the impairment expense in profit or loss and the loss allowance (deducted from the gross carrying amount, or in OCI for FVOCI), with the reconciliation of changes.L2, L3
• Calculate, from the data of a case, the amounts relating to the presentation of impairment and the loss allowance.L2, L3
• Record the journal entries for the presentation of impairment and the loss allowance and measure their effect on the financial position, profit or loss and other comprehensive income.L2, L3

Normative references

• IFRS 9 §5.5.2For a debt instrument at FVOCI, the loss allowance is recognised in other comprehensive income and does not reduce the carrying amount of the asset (which remains at fair value), and the impairment loss is recognised in profit or loss.
• IFRS 9 §5.5.8The amount of expected credit losses (or reversal) required to adjust the loss allowance at the reporting date is recognised in profit or loss as an impairment gain or loss. Linking to this paragraph the presentation, after cure, of the interest difference derives from the Interpretations Committee decision of March 2019.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• The loss allowance of a loan portfolio of Aube SA is {opening_allowance} at the start of the year. Over the year, the charge is {charge} and reversals and write-offs amount to {reversals_and_write_offs}. Calculate the closing loss allowance (reconciliation of movements).L2
• For a debt security measured at FVOCI, how is the loss allowance for expected credit losses presented?L3