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Question ID : 42232

Expected Credit Loss

A company is giving loans against security. While making provision for receivables under IND AS 109 as per Expected Credit Loss model, whether the company can consider the security value and provide under ECL only on the unsecured portion?

Posted by balasubramanian on Mar 10, 2022

Filed Under IFRS

Answer ID : 81451

It is an established principle that the provision for doubt debts is created for the doubtful portion. The ECL is a method of computing the doubtful portion of the receivables. But to the extent the loan is secured, there is no need of making the provisions. Hence but oblivious the provision shall be made for the unsecured portion to the extent of doubtful computed by using ECL.

Posted by CA. JHA SHANKAR KUMAR on Mar 31, 2022