Rebound Inc. reports under IFRS. In 2018 Rebound recognized an impairment of $200,000 due to a troubled debt restructuring. In 2019 Rebound was pleased to determine that more cash flows would be received from the receivable than was previously thought, such that, if the total impairment were to be calculated in 2019, it would be estimated as $150,000 rather than $200,000. How should Rebound treat this in its 2019 income statement?

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Under IFRS, impairment losses on financial assets measured at amortized cost are based on expected credit losses. When new information becomes available in a subsequent period that affects the estimate of expected credit losses, the impairment loss should be adjusted accordingly. In this case, the new estimate of expected credit losses results in a decrease in the impairment loss from $200,000 to $150,000. Therefore, Rebound should recognize an increase in 2019 net income of $50,000, which is the difference between the original impairment loss recognized in 2018 and the revised impairment loss estimated in 2019. Rebound should not make a prior period adjustment in 2018 income as the impairment charge was not in error, but rather based on the information available at that time.