• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exam Results

Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

General/ simplified approach of credit loss- INTASHA question 12 BPP revision ki

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › General/ simplified approach of credit loss- INTASHA question 12 BPP revision ki

  • This topic has 6 replies, 2 voices, and was last updated 5 years ago by Stephen Widberg.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • June 7, 2020 at 9:33 pm #573176
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    General approach:

    under general approach we calculate 12 month credit loss at reporting date. at year end in given question they record
    Dr Finance cost 20.38
    Cr loss allowance 20.38

    my questions are if

    Scenario 1
    if next year X6 credit rating of our customer is not deteriorated we do not need to revise this allowance instead we unwind the financing component

    Dr finance cost 20.38*.08=1.63
    Cr loss allowance 1.63

    Scenario 2
    however if at X6 it is significantly deteriorated how its is recognized at the amount of life time loss which would be

    Dr Finance cost 54.908(75.288-20.38)
    CR allowance 54.908

    scenario 3

    if later on full amount is recovered we will take the effect in profit and loss for the difference?

    Simplified approach

    under simplified approach we are already at under stage two and recognize lifetime credit loss

    my questions are

    do we need to unwind the financing component and charge to profit and loss?

    if at year end we feel that there is no significant deterioration can we change allowance? can we decrease allowance or increase it?

    in OpenTuition notes there are three stages mentioned for credit loss however I didn’t find these three stages in standard. standard just mention about first 12 months and lifetime credit loss. is there any exposure draft on it?

    June 8, 2020 at 2:55 pm #573216
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    Non-receivables – e.g loan assets

    There are definitely 3 stages!

    But you (and Intasha) are over-complicating the issue massively.

    Step 1 Calculate the allowance at the balance sheet date
    Step 2 Compare to prior year allowance and difference goes to P&L (some of the difference relates to the unwinding of the discount- but it’s not worth trying to separate it out)

    Receivables:

    Simplified method applies

    End of what you need to know!

    June 8, 2020 at 8:53 pm #573234
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    sir please clarify only one thing if above gets too complicated I’m sorry

    in simplified approach at each reporting date can we revise our credit allowance?

    as in standard it is said that we can recognize upto amount of life time credit loss. and in simplified approach we make allowance of lifetime credit loss at the start and if year end we have more recoveries or more loss do we need to revise the allowance or take its impact directly to profit and loss??

    June 8, 2020 at 9:05 pm #573237
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    @stephenwidberg said:
    Non-receivables – e.g loan assets

    There are definitely 3 stages!

    But you (and Intasha) are over-complicating the issue massively.

    Step 1 Calculate the allowance at the balance sheet date
    Step 2 Compare to prior year allowance and difference goes to P&L (some of the difference relates to the unwinding of the discount- but it’s not worth trying to separate it out)

    Receivables:

    Simplified method applies

    End of what you need to know!

    Sir you mentioned step 1 and 2 is for general approach. am I right?

    June 9, 2020 at 6:05 am #573249
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    Perfect (everything except receivables)

    June 9, 2020 at 5:10 pm #573305
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    so I assume in simplified approach we cannot revised allowance but later we take effect directly

    in receivables and profit and loss in case of more loss

    and

    if more recoveries then cash and profit and loss

    June 10, 2020 at 5:27 pm #573407
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    No – allowance could go up or down – they’ll probably keep a separate allowance account until the debt is definitely bad

  • Author
    Posts
Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • AdityaSairam on Overcapitalisation and Overtrading – ACCA Financial Management (FM)
  • verweijlisa on Financial performance – Example 2 – ACCA Financial Reporting (FR)
  • John Moffat on Linear Programming – Spare capacity and Shadow prices – ACCA Performance Management (PM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Salexy on Linear Programming – Spare capacity and Shadow prices – ACCA Performance Management (PM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in