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Under Ind AS 109, evidence that a financial asset is CREDIT-IMPAIRED (Stage 3) includes ALL of the following EXCEPT:
ASignificant financial difficulty of the borrower
BLenders granting the borrower a concession for economic/contractual reasons relating to its financial difficulty
CA reasonably probable decline in the borrower's industry's average market price-earnings ratio over the next 12 months
DBreach of contract such as default or past-due event
Answer & Solution
Correct answer: C. A reasonably probable decline in the borrower's industry's average market price-earnings ratio over the next 12 months
Para B5.5.37 — credit-impaired evidence includes: significant financial difficulty, breach of contract, lender-granted concessions tied to borrower's distress, probable bankruptcy, disappearance of an active market due to financial difficulty, or purchase at a deep discount reflecting incurred losses. A broad sector P/E movement is a MACRO/forward-looking indicator that may inform SICR (Stage 2) but is not itself evidence of credit-impairment (Stage 3).
Related questions
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