FASB staff issues Q&As on credit losses

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Writing in diary, laptop, coffe cup on the deskIn this New Developments Summary, Grant Thornton takes a look at two question-and-answer documents issued by the FASB staff to help companies implement the new credit losses guidance in ASC 326.

The FASB staff’s first Q&A, Whether the Weighted-Average Remaining Maturity Method is an Acceptable Method to Estimate Expected Credit Losses, describes a simplified method for estimating the allowance for credit losses called the “weighted-average remaining maturity” (WARM) method.

The second Q&A, Developing an Estimate of Expected Credit Losses on Financial Assets, provides answers to frequently asked questions concerning using historical loss information and developing reasonable, supportable forecasts. This Q&A also responds to questions on the requirements for applying the reversion to historical loss information.

Download a copy of the full New Developments Summary discussion of these Q&As here.