Simplified Approach

IFRS 9 standards state that, for certain specific instruments, it is not essential to determine the significance of an increase in Credit risk. Instead, an Allowance equal to the lifetime Expected Credit Loss can be directly provided.

The instruments in the scope of the simplified approach are the following:

• Lease Receivables
• Trade Receivables, Loan Commitments, and Contract Assets without significant financing component
• Trade Receivables, Loan Commitments, and Contract Assets with significant financing component, and the entity follow the simplified approach.

Note:

For Trade Receivables, Loan Commitments, and Contract Assets with significant financing components, the entity has the option to choose either the general approach or the simplified approach.