FASB makes Codification improvements to credit losses model

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Man holding a credit cardGrant 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, focusing specifically on its guidance on measuring credit losses.

ASU 2019-04 makes several key changes to the credit losses guidance originally issued in ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the current expected credit loss (CECL) model. These changes address matters 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

Our examination of ASU 2019-04 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.

Rahul Gupta
Accounting Principles Group
T +1 312 602 8084

Graham Dyer
Accounting Principles Group
T +1 312 602 8107