Write-off of an uncollectable financial asset

Learning objectives

• Record the write-off of a financial asset when there are no reasonable expectations of recovery, by reducing the gross carrying amount and the loss allowance.L2
• Calculate, from the data of a case, the amounts relating to write-offs of financial assets.L2

Normative references

• IFRS 9 §5.4.4Write-off: when there are no reasonable expectations of recovering a financial asset in its entirety or a portion of it, the gross carrying amount is directly reduced accordingly; a write-off constitutes a derecognition event.

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

2 questions

• Orion SA finds that there is no longer a reasonable expectation of recovering a loan measured at amortised cost, whose gross carrying amount is {gross_carrying_amount} and which is fully covered by a loss allowance of {loss_allowance}. Record the write-off entry.L2
• Over the year, the loss allowance of a portfolio of loans of Lune SA moves from {opening_allowance} to {closing_allowance}. During the year, loans were written off for {write_offs}, charged against the loss allowance. Calculate the impairment expense for the year.L2