ACTG 3110 Lecture Notes - Lecture 10: Effective Interest Rate, Financial Instrument, Equity Method

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This will allow to predict impairment in the future as well. Right now under ifrs, impairment is measured depending on how a financial instrument is classified. Under the new model, measurement of impairment will be the same regardless of the type of instrument and its classification. First: portion of expected credit losses is recognized. Second: interest revenue is calculated depends on whether an asset is considered to be credit impaired - you used ac amount of the asset which applied the effective interest rate. Liabilities still ac but need to value at fv. Must disclose to assist investors and analysts to understand the amount of credit losses, the basis for their measurement and the reasons for changes in expected credit loss over time, key assumptions used to predict credit losses. This improvement is based on better predicting expected credit losses. Consolidations: no more acg-15 headaches for private enterprises.

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