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Chapter 11





                           Impairment





               5.1   Background

               IFRS 9 Financial Instruments uses an expected loss approach to impairment
               accounting. This ensures timely recognition of impairment losses.

               The impairment rules in IFRS 9 apply to debt instruments measured at amortised
               cost or at fair value through other comprehensive income.


               5.2   Impairment accounting

               For financial assets within the scope of the impairment rules, entities must calculate a
               loss allowance.

               Increases and decreases in the loss allowance are charged to profit or loss.

               This loss allowance must be equal to:


                    12 month expected credit losses if credit risk has not increased significantly

                    Lifetime expected credit losses if credit risk has increased significantly.

               IFRS 9 provides the following definitions:

                             Credit loss: the present value of the difference between the contractual
                             cash flows due to an entity and the cash flows that it expects to receive.

                             Expected credit loss: the weighted average credit losses.

                             Lifetime expected credit losses:  The expected credit losses that
                             result from all possible default events.

                             12 month expected credit losses: The proportion of the lifetime
                             expected credit losses that arise from default events within 12 months
                             of the reporting date.


















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