Page 9 - Bramasol_eBook-Overview of IFRS 9

Disclosures

Companies subject to IFRS 9 are required to disclose The analysis conducted by the Company between the
information that explains the basis for their ECL new standard requirements and the previous accounting
calculations and how they measure ECLs and assess principles for financial instruments has led to the following
changes in credit risk. They must also provide a main differences:
reconciliation of the opening and closing ECL amounts
and carrying values of the associated assets separately for - trade receivables impairment: the adoption of IFRS 9
different categories of ECL (for example, 12-month and has changed the Company’s accounting for impairment
lifetime loss amounts) and by asset class. losses for financial assets by replacing IAS 39’s incurred
loss approach with a forward-looking expected credit loss
TechnipFMC IFRS Financial Statements (“ECL”) approach. IFRS 9 requires the Company to record an
for the half-year ended June 30, 2018 allowance for ECL’s for all loans and other financial assets
not held at fair value through net income. For contract
IFRS 9 disclosure excerpt: assets, trade receivables and loans, the Company has
calculated an ECL based on loss rates from historical data.

IFRS 9 “FINANCIAL INSTRUMENTS” the Company has established a provision matrix that is
based on the Company’s historical credit loss experience
specific to the debtors and the economic environment.
The adoption of the ECL requirements of IFRS 9 resulted
“Effective January 1, 2018, IFRS 9 replaces IAS 39 bringing in increases in impairment allowances of the Company’s
together all three aspects of the accounting for financial financial assets impacting retained earnings by $4.9
instruments: classification and measurement; impairment; million as of January 1, 2018.”
and hedge accounting. The Company has applied IFRS
9 retrospectively, with the initial application date of
January 1, 2018. The hedge accounting portion of the
new standard’s adoption is postponed according to the
dispositions of IFRS 9.7.2.21.

Summary

The new expected credit losses model introduces faster analyses and more updated reporting as companies are
required to recognize ECLs at all times, taking into account past events, current conditions and forecast information, and
to update the amount of ECLs recognized at each reporting date to reflect changes in an asset’s credit risk. It is a more
forward-looking approach than its predecessor and will result in more timely recognition of credit losses

For More information:
Visit the Bramasol Resource Center
www.bramasol.com/resource-center

Bramasol Resource Center

9 Copyright © 2018 Bramasol Inc. www.bramasol.com