Handbooks  |  October 2019

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 for recently issued and forthcoming amendments and continuing developments in practice.


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

Relevant dates

The FASB has proposed 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-profit companies and employee benefit plans. Read our web article here.

Entity type

Effective date for calendar year-end entity



SEC filers that are not eligible to be smaller reporting companies

January 1, 2020

January 1, 2020

SEC filers that are eligible to be smaller reporting companies

January 1, 2020

January 1, 2023

PBEs that are not SEC filers

January 1, 2021

January 1, 2023

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

January 1, 2022

January 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
  • Updated for recent issued and forthcoming amendments to Topic 326, practice developments and evolving interpretations

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
  • 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

Partner, Audit, KPMG US

+1 212-954-7355
Mark Northan

Mark Northan

Partner, DPP, KPMG US

+1 212-954-6927
Danielle Imperiale

Danielle Imperiale

Executive Director, DPP, KPMG US

+1 212-954-3866



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