ECL26200 - ECL example: an AP ending in the FY which is shorter than 12-months

If the relevant accounting period is for a period other than 12 months, an adjustment of the band ranges is needed (see ECL24200). This adjustment is calculated using days.

Theta Ltd鈥檚 first accounting period is a 182-day accounting period from 1 October to 31 March. It is the only accounting period ending within the financial year and is therefore Theta Ltd鈥檚 relevant accounting period for ECL. Theta Ltd was supervised for MLR for the entire period. Theta Ltd鈥檚 UK revenue for this period is 拢20 million.

Because the relevant accounting periods is other than 12 months, a proportional adjustment of the ECL band ranges is needed using a daily basis calculation.

There are 182 days in Theta Ltd鈥檚 relevant accounting period, so the band ranges must be adjusted by multiplying them by 182/365.

This means that the adjusted ECL band ranges are as follows (rounded for simplicity):

  • Small: Does not exceed 拢5,086,000
  • Medium: More than 拢5,086,000 but no more than 拢17,950,000
  • Large: More than 拢17,950,000 but no more than 拢498,000,000
  • Very Large: More than 拢498,000,000

With a turnover of 拢20 million from a 182-day relevant accounting period, Theta Ltd falls within the large band, as this is within the adjusted band ranges.