Note 11, p 57 2018 CCP Annual Report:PDLs are recognised at fair...

Note 11, p 57 2018 CCP Annual Report:
PDLs are recognised at fair value (generally the consideration paid) and subsequently measured at amortised cost using the effective interest rate method, in accordance with AASB 9 Financial Instruments. The interest rate method is applied at the level of individual tranches of PDLs by using an actuarially determined six-year cash collections forecast to determine an effective interest rate or implicit cash flow. The effective interest rate is the implicit interest rate based on forecast collections determined in the period of acquisition of an individual PDL and equates to the Internal Rate of Return (IRR) of the forecast cash flows without any consideration of collection costs.This effective interest rate is used over the collection life cycle to apportion cash collections between the principal and interest components. Changes in expected cash collections generate an adjustment to interest income in the period of the amended forecast.