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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Allowance for credit loss
“A loss allowance for full lifetime expected credit losses is required for a financial instrument if the credit risk of that financial instrument has increased significantly since initial recognition, as well as to contract assets or trade receivables that do not constitute a financing transaction in accordance with IFRS 15.”
What is the financing transaction in IFRS 15 ? referring to which part of IFRS 15?
Thank you.
Loan assets AND trade receivables due after more than one year – only make 100% allowance when credit risk increases
Trade receivables within 1 year (‘no significant financing component) – make 100% allowance at time of sale (if considered necessary)