Impairment

IFRS 9 introduces the level of expected credit losses which applies to:

- all debt instruments (including bank deposits, trade receivables and debt securities),
- instruments measured at both amortised costs and fair value through other comprehensive income.

In addition, this model will apply to:

- contract assets and lease receivables;
- loan commitments;
- financial guarantee contracts that are not measured at fair value through profit or loss.

Impairment will be recognised in three stages:

→ Stage 1: upon initial recognition of a financial instrument, a part of credit losses estimated in the period of the first 12 months from the date of initial recognition will be recognised for all financial instruments — as an approximation of expected credit losses for a particular financial instrument.
→ Stages 2 and 3: due to an increase in credit risk since the initial recognition, an entity will be required to recognise the full value of credit losses expected over the lifetime of the instrument.

The difference between Stage 2 and Stage 3 is as follows:

- in Stage 2, the deterioration of credit quality is assessed for a group of assets
- in Stage 3, it is possible to assess a particular asset individually (e.g. a default in payment).

We provide IFRS 9 and other services throughout Poland in regional offices in Warsaw, Łódź and Poznań, Opole, Wrocław, Katowice, Lublin, Gdańsk and Zielona Góra.