Handbooks  |  March 2018

Handbook: Credit impairment

KPMG’s guidance on and interpretation of ASC 326. KPMG explains the new credit impairment standard (CECL) in detail, providing examples and analysis, updated to include recent developments and an in-depth example.

Applicability

  • All companies

Effective dates

Mandatory effective dates and early adoption provisions:

Annual periods:

For public business entities that are SEC filers the effective date for annual periods is the fiscal years beginning after Dec. 15, 2019.

For public business entities that are not SEC filers the effective date for Annual periods is the fiscal years beginning after Dec. 15, 2020.

All other entities have an effective date for annual periods is the fiscal years beginning after Dec. 15, 2020.

Interim periods:

For public business entities that are SEC filers the effective date for Interim periods is the fiscal years beginning after Dec. 15, 2019.

For public business entities that are not SEC filers the effective date for Interim periods is the fiscal years beginning after Dec. 15, 2020.

All other entities have an effective date for annual periods is the fiscal Interim beginning after December 15, 2021.

Early adoption:

For public business entities that are SEC filers the effective date for early adoption is allowed in the annual and interim periods beginning after Dec. 15, 2018.

Key impacts

  • Q&As that answer the questions we are encountering in practice
  • Examples to explain key concepts
  • Changes from legacy US GAAP
  • Updated for recent developments and new interpretations
  • Updated for an example illustrating one method for estimating the allowance for credit losses

Report contents

ASC 326-20

  • Scope
  • Recognition of expected credit losses
  • 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 collateral dependent financial assets
  • Troubled debt restructurings
  • Purchased financial assets with credit deterioration
  • Off-balance sheet credit exposures
  • Financial 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

Related content

Spotlight on contributors

Mahesh Narayanasami

Mahesh Narayanasami

Principal, DPP, KPMG (US)

+1 212-954-7355
Mark Northan

Mark Northan

Partner, DPP, KPMG (US)

+1 212-954-6927
Jennifer Stemple

Jennifer Stemple

Partner, Audit, KPMG (US)

+1 212-872-5720

 

 

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