IFRS 9 example: purchased credit-impaired financial asset and credit adjusted EIR

Below are calculations accompanying the example available on IFRScommunity.com under direct link below:

https://ifrscommunity.com/knowledge-base/ifrs-9-impairment/#link-ifrs_9_example_purchased_credit-impaired_asset_credi

On IFRScommunity.com, years are written as 20X1, 20X2 etc., but this changes to 2001, 2002 etc. whenever a spreadsheet form
Hence this example starts in 2003, but is NOT outdated at all :)

1/1/2003 Acquisition date

5,000 Price paid
10,000 Face value
600 Coupon
12/31/2006 Contractual redemption date

Contractual cash flows Expected cash flows

Date Amount Date Amount
1/1/2003 600 1/1/2003 -
12/31/2003 600 12/31/2003 -
12/31/2004 600 12/31/2004 -
12/31/2005 600 12/31/2005 -
12/31/2006 10,600 12/31/2006 8,000

33.3% contractual EIR 12.5% credit adjusted EIR

Date Amount Date Amount

1/1/2003 (5,000) 1/1/2003 (5,000)
1/1/2003 600 <- past due coupon 1/1/2003 -
12/31/2003 600 12/31/2003 -
12/31/2004 600 12/31/2004 -
12/31/2005 600 12/31/2005 -
12/31/2006 10,600 12/31/2006 8,000

Schedule for amortised cost using credit adjusted EIR

opening closing
balance impairment balance
year 1 Jan gain interest in P/L cash flow 31 Dec
 2003 5,000 - 623 - 5,623
2004 5,623 - 701 - 6,325
2005 6,325 - 789 - 7,113
2006 7,113 - 887 (8,000) (0)

On 1 January 20X6, Entity A revises its estimates and expects to receive 8.500 which it finally receives on 31 December 20X6.

Schedule for amortised cost using credit adjusted EIR - after revision to cash flows

opening closing
balance impairment balance
year 1 Jan gain interest in P/L cash flow 31 Dec
2003 5,000 - 623 - 5,623
2004 5,623 - 701 - 6,325
2005 6,325 - 789 - 7,113
2006 7,113 445 942 (8,500) - <- on 1 January 2006, Entity A revises its esti
direct link below:

ased_credit-impaired_asset_credit_adjusted_EIR_01

2 etc. whenever a spreadsheet formula needs a valid format date as an input.

y receives on 31 December 20X6.

nuary 2006, Entity A revises its estimates and expects to receive 8.500
8,500