MFRS 9 Impairment Quiz

Under MFRS 9, impairment is based on:

• Incurred loss model

• Realised loss model

• Expected credit loss model

• Cash shortfall model

How many stages of credit impairment does MFRS 9 identify for Expected Credit Loss (ECL) measurement?

• Two

• Three

• Four

• Five

Which of the following best describes Stage 1 in the MFRS 9 impairment model?

• Lifetime expected credit losses

• 12-month expected credit losses

• Asset is credit impaired

• No impairment is recognised

When does a financial asset move from Stage 1 to Stage 2?

• Upon default

• Upon origination

• When there is a significant increase in credit risk

• When it becomes a purchased or originated credit-impaired (POCI) asset

What are examples of indicators of a Significant Increase in Credit Risk (SICR) under MFRS 9?

• Increase in GDP and rising interest income

• Improved credit rating and increased collateral

• Past due status, significant drop in credit score, and adverse changes in economic outlook

• Loan origination and increase in asset value

Which of the following is not a factor considered in assessing a significant increase in credit risk (SICR)?

• Credit rating downgrade

• Change in collateral value

• Change in payment behavior

• Adverse changes in macroeconomic indicators

MFRS 9 requires entities to consider which type of information in measuring ECL?

• Only historical data

• Only current data

• Forward-looking information

• Management's discretion only

What type of expected credit loss is recognised for Stage 3 assets?

• No ECL

• 12-month ECL

• Lifetime ECL

• Only historical ECL

What are the key components used to estimate ECL using the discounted cash flow (DCF) approach?

• Outstanding balance

• Outstanding balance and collateral information

• Outstanding balance, expected future cash flows, timing of cash flows, and discount rate

• Loan origination cost, interest rate, and loan term

What happens to the interest revenue recognition when a financial asset moves to Stage 3 under MFRS 9?

• Interest continues to be recognised on the gross carrying amount

• Interest is no longer recognised

• Interest is recognised based on the net carrying amount (i.e., after deducting loss allowance)

• Interest is capitalised until recovery