Simplified Approach to the Application of IFRS 9 to Accounts Receivable

The introduction of the new International Financial Reporting Standard 9 (IFRS 9) – Financial Instruments, besides having a significant impact on the financial sector, introduces certain innovations in the accounting treatment of financial instruments for business entities that are not financial organizations. One of the most significant changes IFRS 9 brings to non-financial business entities is a new approach to valuing the impairment of receivables from customers. Since it is common practice for non-financial institutions to not have receivables with a significant financing component, this paper presents a simplified approach to calculating the impairment of receivables from customers according to the new standard. In addition to proposing a method for calculating the impairment of receivables from customers in accordance with IFRS 9, the paper also presents the method of accounting for the calculated impairment in the first and subsequent years of applying this standard, as well as the tax aspect of valuing the impairment of receivables from the perspective of the Corporate Income Tax Law. Besides the accounting aspect of applying this standard, the paper also highlights the importance of IFRS 9 for better receivables management, liquidity management, and credit risk management faced by business entities.