top of page
  • Writer's pictureThomas Tsang

Expected credit loss

For trade receivable, we apply simplified approach to estimate the ECL rate. We would know the total doubtful debts for the total sales of a year. We can calculate the default rate of total sales by debts over yearly sales. This default rate assumed to be ECL rate for current debts for usual 30 days credit term. This ECL would be the starter rate for current aged debts. The ECL estimated to be increasing when the debts aged. We estimate the incremental ECL rate over the aging receivable up to one year that give rise to the amount of doubtful debts.

Then the ECL rate for each aged group is calculate.

7 views0 comments

Recent Posts

See All

Prior year error

When there was a judgement made in prior year without concrete evidence of support. The audit should have qualified it. When in subsequent year, the judgement is changes with the intention to correct

Impairment test under US GAAP

Under US GAAP, the carrying amount of the assets is compared to the undiscounted future cash flow of the assets generated. If the amount of undiscounted cash flow is highr than carrying amount, no im

Discount on enterprise value

When apply discount on lack of marketability (DLOM) and lack of control (DLOC) on enterprise value (EV), it is a multiple of EV x (1-DLOM) x (1-DLOC). But apply the discount on Equity value would lowe


bottom of page