Lifetime Expected Credit Loss Meaning

Accounting glossary · Understand, connect, apply

Lifetime expected credit loss reflects cash shortfalls from all possible default events over the expected life of an instrument within the IFRS 9 impairment model.

Example

A lender estimates losses from defaults that could occur at any time during the remaining three years of a loan and discounts the expected cash shortfalls.

Remember the difference

A significant increase in credit risk generally triggers lifetime measurement in the general model. Some trade receivables use lifetime measurement under the simplified approach.

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Prepared with AI assistance. Examples are fictional and simplified for learning.

Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.

Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.

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