Page 180 - SBR Integrated Workbook STUDENT S18-J19

Chapter 12

5.4 Measuring expected losses

An entity’s estimate of expected credit losses must be:

 unbiased and probability weighted

 reflective of the time value of money

 based on information about past events, current conditions and forecasts of
future economic conditions.

If an asset is credit impaired at the reporting date, then the expected credit losses
should be measured as the difference between the asset’s gross carrying amount
and the present value of the estimated future cash flows when discounted at the
original effective rate of interest.

174