Hot Topic | June 2020



Lender accounting for COVID-19 loan modifications

Latest edition: Accounting considerations for COVID-19 loan modifications, including guidance on TDR determinations.

Mark Northan

Mark Northan

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-6927

Lisa Blackburn

Lisa Blackburn

Executive Director, Dept. of Professional Practice, KPMG US

Lenders are providing relief to borrowers in consideration of the economic disruption caused by COVID-19. KPMG explains how to account for loan modifications, including whether they result in the loan being a troubled debt restructuring (TDR).


  • Companies that modify loans measured at amortized cost

Relevant dates

  • Effective immediately

Key impacts

  • Accounting for loans due to COVID-19 depends in part on whether they represent troubled debt restructurings (TDRs). The CARES Act and a joint statement issued by federal banking regulators (Interagency Statement) may affect whether a lender accounts for a loan modification as a TDR.
  • When a loan modification that is not a TDR includes a period of low (or no) interest, the lender may – but is not required to – limit interest income recognition if it would cause the loan’s carrying amount to exceed the amount at which the borrower could settle the loan.

Report contents

  • Background and impacts
  • Whether to account for a loan modification as a TDR
  • Determining whether a modification results in a new loan
  • Recognizing interest income during a payment holiday
  • Expected credit losses
  • Disclosure considerations
  • Evolving information

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