Impairment and derecognition

In this lesson

1. 0:00 Impairment and derecognition overview
2. 0:17 Expected credit losses measurement approaches
3. 1:09 12-month versus lifetime credit losses recognition
4. 2:09 Assessing significant increase in credit risk
5. 3:05 Measuring expected credit losses calculation
6. 4:13 Credit impaired financial assets
7. 5:36 Impairment treatment by asset classification
8. 6:21 Simplified approach for receivables
9. 7:01 Reversal of impairment losses
10. 7:40 Derecognition of financial instruments
11. 8:21 Fair value changes on derecognition

About this lesson

You'll explore the two-stage impairment model—12-month versus lifetime expected credit losses—understand what triggers a significant increase in credit risk, and see how to calculate credit losses using probability-weighted outcomes. This is essential for Financial Reporting and Strategic Business Reporting papers, where impairment and derecognition decisions directly affect asset valuations and profit or loss. The video covers the practical mechanics of impairment measurement. You'll learn how to identify credit-impaired assets, apply the simplified approach for trade receivables and contract assets, and recognise loss allowances in your statement of financial position. The lesson explains when credit risk is considered significant—including the 30-day past-due trigger—and how to reverse impairments when conditions improve. You'll also see how to handle equity and debt instruments differently when derecognising, including when gains and losses flow through profit or loss versus other comprehensive income. Understanding these rules helps you avoid common errors in financial statement preparation and supports confident exam performance.

Duration: 9m