Direct Hire Accounting, Finance, Tax, Banking and HR

Contact Us
877.823.3669

Accounting for Credit Losses

Author: Moe Harrison /Wednesday, June 29, 2016/Categories: SNI Companies, SNI Financial, Financial Staffing, SNI Certes, Financial Staffing, Accounting Now

Rate this article:
5.0

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments.

The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

The ASU on credit losses will take effect for U.S. Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

For public companies that are not SEC filers, the ASU on credit losses will take effect for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

For all other organizations, the ASU on credit losses will take effect for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.

Print

Number of views (9628)/Comments (0)

Moe Harrison
Moe Harrison

Moe Harrison

Moe Harrison is a Regional Vice President with SNI. With more than 15 years’ experience in recruiting and personnel management, Moe has a unique perspective on the top issues and concerns of employers and candidates in the accounting and finance fields.

Other posts by Moe Harrison
Contact author Full biography

Full biography

Moe Harrison is a Regional Vice President with SNI. With more than 15 years’ experience in recruiting and personnel management, Moe has a unique perspective on the top issues and concerns of employers and candidates in the accounting and finance fields.

x

Leave a comment

This form collects your name, email, IP address and content so that we can keep track of the comments placed on the website. For more info check our Privacy Policy and Terms Of Use where you will get more info on where, how and why we store your data.
Add comment

Contact author

x
Subscribe to Our RSS Feeds!