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Loss allowance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Loss allowance

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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  • June 1, 2021 at 12:48 pm #622619
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    Sir whether a los allowance needs to be made equal to 12month expected credit losses or lifetime expected credit losses, the method to calculate loss allowance remains same right? i.e. this way:

    The difference between gross caring amount of asset and PV of expected future cash inflows discounted using the original effective rate if interest.

    And if we have to make 12month expected credit losses then multiply with respective probability but if lifetime then 100% of credit losses.

    Is all of the above i state correct?

    June 2, 2021 at 10:38 am #622763
    Stephen Widberg
    Moderator
    • Topics: 10
    • Replies: 2529
    • ☆☆☆☆☆

    That is all correct. I suspect they will give you lifetime losses and the 12 month probability.

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