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’s 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’s relevant accounting period for ECL. Theta Ltd was supervised for MLR for the entire period. Theta Ltd’s UK revenue for this period is £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’s 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 £5,086,000

• Medium: More than £5,086,000 but no more than £17,950,000

• Large: More than £17,950,000 but no more than £498,000,000

• Very Large: More than £498,000,000

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