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