FASB makes Codification improvements to credit losses model


Grant Thornton’s New Developments Summary explores the amendments in the FASB’s Accounting Standards Update (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and in ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.

ASU 2019-04 and ASU 2019-11 make several key changes to the credit losses guidance originally issued in ASU 2016-13, including

  • Accounting for accrued interest
  • Accounting for transfers between classifications or categories of loans or debt securities
  • Recognizing expected recoveries in the allowance for credit losses
  • Determining the discount rate when using a discounted cash flow method to estimate the allowance for credit losses
  • Providing vintage disclosures

Reporting entities should adopt the amendments in ASUs 2019-04 and 2019-11 when they adopt the guidance in ASU 2016-13.

Our examination of ASU 2019-04 also includes numerous Grant Thornton insights to equip companies with a practical approach for assessing and implementing the new guidance.

Read our complete New Developments Summary here.





More new developments