The FASB issued ASU 2025-08, Financial Instruments – Credit Losses (Topic 326): Purchased Loans, to expand the population of acquired financial assets subject to the “gross-up” approach under the guidance in ASC 326, Financial Instruments – Credit Losses.
Under the gross-up approach, the acquirer recognizes an allowance for credit loss on the acquired financial asset by increasing the amortized cost basis of the asset rather than through credit loss expense. Previously, the gross-up approach was limited only to purchased financial assets with credit deterioration. However, the amendments in the ASU create a new class of purchased financial assets – “purchased seasoned loans” – subject to the same gross-up approach on initial recognition as purchased financial assets with credit deterioration.
Snapshot 2025-15, “Accounting for purchased loans,” summarizes the amendments under ASU 2025-08, including direct citations and examples from the FASB Codification as well as insights from Grant Thornton professionals.
Download (PDF - 378 KB) Snapshot 2025-15 to read more.
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