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Entity A has trade receivables of ₹30 crore with no significant financing component. Lifetime ECL using a provision matrix totals ₹58 lakh. Under Ind AS 109, the loss allowance to be recognised in the P&L is:
ANil until specific receivables are demonstrably impaired
B₹58 lakh — measured at lifetime ECL using the simplified approach (mandatory for such trade receivables)
C12-month ECL only — since trade receivables typically settle within a year
D₹30 crore × 1% standard provision
Answer & Solution
Correct answer: B. ₹58 lakh — measured at lifetime ECL using the simplified approach (mandatory for such trade receivables)
Para 5.5.15 + simplified approach — for trade receivables without a significant financing component, lifetime ECL is mandatory at every reporting date. ₹58 lakh from the provision matrix is the right loss allowance. The general (three-stage) approach does not apply here, and there is no standardised "1% provision" rule.
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