Hot Topic | September 2022

Insight

FAQs about FASB’s ASU on modified receivables

We answer questions encountered in practice about the amended TDR guidance and enhanced disclosures for creditors.

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

ASU 2022-02 eliminates the requirement for creditors to recognize and measure certain modifications of receivables as troubled debt restructurings, and enhances disclosures about certain modifications of receivables. KPMG answers the questions we have encountered in practice about implementing the new ASU.

Applicability

  • Entities that have adopted the credit impairment standard (ASC 326)

Relevant dates

Effective date Entities that have adopted ASC 326 All other entities
Annual and interim periods – Fiscal years beginning after December 15, 2022 December 15, 2022 (consistent with when the entity first applies ASC 326) 
Early adoption permitted? Early adoption is permitted for an entity that has adopted ASC 326. An entity can early adopt the guidance for modified receivables in any interim period, but must apply all of the ASU’s guidance for modified receivables as of the beginning of the fiscal year that includes the interim period.

Key impacts

In this Hot Topic, we provide our views on:

  • How expected credit losses are estimated after adoption for receivables that were modified in a TDR before adoption
  • The impact of early adopting the ASU in an interim period other than the first interim period of a fiscal year
  • How the ASU’s requirements for enhanced disclosures about certain receivable modifications are satisfied, including what modifications and defaults are subject to each disclosure

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