Handbooks | December 2019

Handbook: Credit impairment

KPMG’s guidance on and interpretation of ASC 326. This latest edition includes new questions and examples, and updates our guidance for recently issued amendments to Topic 326.


  • Companies that hold financial instruments in the scope of the credit losses standard

Relevant dates

The FASB has issued guidance deferring the effective dates for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and other private companies, including not-for-profits and employee benefit plans.

Entity type

Effective date for calendar year-end entity



SEC filers that are not eligible to be smaller reporting companies

Jan 1, 2020

Jan 1, 2020

SEC filers that are eligible to be smaller reporting companies

Jan 1, 2020

Jan 1, 2023

Public business entities that are not SEC filers

Jan 1, 2021

Jan 1, 2023

All other entities, including not-for-profits and employee benefit plans

Jan 1, 2022

Jan 1, 2023


Key impacts

  • Q&As that answer the questions we are encountering in practice.
  • Examples to explain key concepts.
  • Changes from legacy US GAAP.
  • In-depth illustrated example based on a hypothetical company and one method for estimating the allowance for credit losses.
  • Updates our guidance for ASU 2019-10 and ASU 2019-11.

Report contents

ASC 326-20

  • Scope
  • Recognition of expected credit losses, writeoffs and recoveries
  • Methods to estimate expected credit losses and collective assessment
  • Contractual term
  • Historical loss experience, forecasts and reversion
  • No allowance for credit losses
  • Credit enhancements and practical expedients
  • Troubled debt restructurings
  • Purchased financial assets with credit deterioration
  • Off-balance sheet credit exposures
  • Guarantees
  • Other investments in equity method investees
  • Net investment in leases
  • Specific considerations for insurance entities, commercial entities and trade receivables
  • Illustrative example

ASC 326-30

  • Targeted changes for AFS debt securities

Relevant to ASC 326-20 and 326-30

  • Beneficial interests
  • Subsequent events
  • Income taxes
  • Presentation, disclosure, effective date and transition

Spotlight on contributors

Mahesh Narayanasami

Mahesh Narayanasami

Partner, Audit, Dept. of Professional Practice, KPMG (US)

Mark Northan

Mark Northan

Partner, DPP, KPMG US

Danielle Imperiale

Danielle Imperiale

Executive Director, DPP, KPMG US



Subscribe to our newsletter

Receive timely updates on accounting and financial reporting topics from KPMG.


Visit KPMG's Accounting Research Online for financial reporting resources.