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Understanding the General Approach in Accounting: Lifetime Expected Credit Losses and Impairment
An entity is not required to track the changes in credit risk on the financial instruments at each reporting date, but instead requires the entity to recognize a loss allowance based on lifetime expected credit losses at each reporting date. Which impairment approach is this describing? A. Purchased or originated credit-impaired approach B. Simplified approach C. General approach D. Incurred loss approach

This description corresponds to the General Approach, which requires entities to recognize a loss allowance based on lifetime expected credit losses for all financial instruments at each reporting date, not just for those that have experienced a significant increase in credit risk. Therefore, the correct answer is:

C. General approach