Accounting considerations in response to COVID-19 — Expected credit losses on financial assets
COVID-19 can affect the ability of borrowers, whether corporate or individuals, to reimburse amounts owed. Individual and corporate borrowers may have a particular exposure to the economic impacts in their geography and industry sector. The impact of COVID-19 on expected credit losses (or ECL) will be particularly challenging and significant for banks and other lending businesses. However, the effect could also be significant for non-financial corporates. This is because ECL does not only apply to loans but also applies to many investments in interest bearing financial assets.
This video is part of our series of videos on accounting considerations with regard to COVID-19.