Accounting exposure of unused credit card balances

With respect to the accounting recording of unused credit card balances within off-balance sheet items 721050/725050, should the amount corresponding to the total unused limit granted to the customer be reported, or should the conversion factor used for the calculation of the expected credit loss (PCE) be taken into account?

Off-balance sheet item 721050/725050 “Unused credit card balances” is used as supplementary information to provide the total exposure of such balances. That is, it corresponds to the limit of the unused balance, without taking into account conversion factors.

On the other hand, the liability account 340032 “Provisions – For unused credit card balances” includes the accumulated PCE amount that must be recognised based on the risk of uncollectibility, arising from the assessment of the degree of compliance of the beneficiaries of the unused credit card balances. For the purposes of determining such impairment, a conversion factor may be applied to the total limit reported in account 721050/725050 as part of the process of calculating the entity’s PCE.

Rules involved:

IFRS 10 – Consolidated Financial Statements

IFRS 9 – Financial Instruments

Supplementary provisions to the Chart of Accounts