Information about credit quality, amortization cost by credit quality indicator for the prior five years and in the aggregate, and the methodology for estimating credit losses must be disclosed for all receivables reported at amortized cost.
According to the accounting principle of amortized cost, all financial assets must be recorded at their amortized value on a balance sheet, which is equal to the acquisition cost less any principal repayments, discounts, or premiums, less any impairment losses, and any exchange rate variations.
Credit quality is a metric used to assess a person's or business's creditworthiness, or capacity to pay back its loan. Credit risk may be determined by credit quality. One of the main factors used to assess the investment quality of a bond or a bond mutual fund is credit quality. Bond ratings are used to evaluate a company's credit worthiness before it issues bonds. Credit ratings are used to evaluate the credit quality of securities and other companies, such as insurance companies.
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