Case 1: Change in the Economic Situation

You grant a current account credit of USD 100,000. In 1998, changes in the economic situation lead to a credit risk amounting to USD 50,000. A fixed value adjustment of USD 50,000 is posted in 1998 as follows:

			Fixed IVA amount before posting run	50,000
			IVA posted before posting run	0
IVA on Receivables		Write Off on Receivables
	50,000	50,000
			Fixed IVA amount after posting run	50,000
			IVA posted after posting run	50,000

Further postings depend on whether the postings are made in the current fiscal year or the subsequent fiscal year.

Adjustments During the Current Fiscal Year

The system makes the following postings if the adjustments occur during the current fiscal year.

Credit risk increases to USD 70,000 in 9/98

The IVA amount is adjusted as follows:

			Fixed IVA amount before posting run	70,000
			IVA posted before posting run	50,000
IVA on Receivables		Write Off on Receivables
	20,000	20,000
			Fixed IVA amount after posting run	70,000
			IVA posted after posting run	70,000

Credit risk decreases to USD 20,000 in 12/98

The IVA amount is adjusted as follows:

			Fixed IVA amount before posting run	20,000
			IVA posted before posting run	70,000
IVA on Receivables	Write Off on Receivables
50,000		50,000
			Fixed IVA amount after posting run	20,000
			IVA posted after posting run	20,000

Adjustments During the Subsequent Fiscal Year

The system makes the following postings if the adjustments occur during a subsequent fiscal year.

Credit risk increases to USD 70,000 in 9/99

The IVA amount is adjusted as follows:

			Fixed IVA amount before posting run	70,000
			IVA posted before posting run	50,000
IVA on Receivables		Write Off on Receivables
	20,000	20,000
			Fixed IVA amount after posting run	70,000
			IVA posted after posting run	70,000

Credit risk decreases to USD 20,000 in 12/99

The IVA amount is adjusted as follows:

			Fixed IVA amount before posting run	20,000
			IVA posted before posting run	70,000
IVA on Receivables	Write Off on Receivables
20,000		20,000
30,000

	Income from IVA Reversal
		30,000
			Fixed IVA amount after posting run	20,000
			IVA posted after posting run	20,000