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.

Contacts:

Rahul Gupta

Partner, National Professional Standards Group, Grant Thornton LLP
Principal, Grant Thornton Advisors LLC

+1 312 602 8084

Graham Dyer

Partner, Accounting Principles Group, Grant Thornton LLP
Principal, Grant Thornton Advisors LLC

Graham Dyer serves as Grant Thornton LLP’s Chief Accountant. In this role, he leads the firm’s national Accounting Principles Group, which is responsible for Grant Thornton’s interpretation of accounting matters in both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS).

Dallas, Texas

+1 312 602 8107