IASB new impairment model aims to smooth writedowns
The International Accounting Standards Board has published draft plans to change how impairment of assets is treated on balance sheets which should result in losses being taken earlier in the cycle.
Under the International Financial Reporting Standards, impairments on financial assets are only recorded when a loss has been incurred or a trigger event such as bankruptcy indicates a loss is imminent. Consequently, contractual interest income on a loan is fully included in the amortised cost of an asset.
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