Regulatory Alerts2017-08-04
Circular 2/2017 of the Bank of Spain modifying Circular 5/2015 on the accounting specifics of SAREB
The Bank of Spain issued Circular 2/2017 to amend Circular 5/2015, aligning SAREB's accounting standards with the impairment recognition rules established by Royal Decree-Law 4/2016. The regulation mandates that SAREB must record asset impairment losses directly in equity under a specific adjustment account, rather than in the income statement. These equity adjustments are subsequently transferred to the income statement only when the entity reports a positive annual result, and reversals of impairment are processed by first reducing the equity balance before affecting profit or loss.
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