IASB consults on feasibility of expected loss model
30 June 2009
The IASB request information on the feasibility of an expected loss model for the impairment of financial assets, and asks about the practical issues that would arise if an expected loss model was required.
The Request seeks input on the practical issues that would arise, if an expected loss model was required. The input will assist the IASB in developing formal proposals that it plans to publish in an exposure draft in October 2009.
The current model in IAS 39 requires an entity to account for credit losses in financial assets only if an event has occurred that has a negative effect on future cash flows and that effect can be reliably estimated.
The expected loss model requires an entity to make an ongoing assessment of expected credit losses, which may require earlier recognition of credit losses.
Deadline for consultation is 1 September 2009.
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