Defining Issues | March 2022

 

Insight

FASB amends TDR guidance and enhances disclosures

ASU eliminates TDR recognition and measurement guidance for creditors and requires new disclosures.

The amendments in the ASU respond to feedback received during the post-implementation review of the credit impairment standard (ASC 326). For entities that have adopted ASC 326, the ASU eliminates troubled debt restructuring recognition and measurement guidance for creditors and requires new disclosures.

Applicability

ASU 2022-02

  • 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? Yes; early adoption is permitted for an entity that has adopted ASC 326 in any interim period as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments related to receivable modifications by creditors separately from the amendments related to vintage disclosures – gross writeoffs.

 

Key impacts

The ASU:

  • Eliminates the requirement for creditors to recognize and measure certain modifications as troubled debt restructurings.
  • Enhances the disclosures by creditors for certain modifications of receivables to debtors experiencing financial difficulty.
  • Requires public business entities to disclose current-period gross writeoffs by year of origination (i.e. the vintage year) for the related financing receivables and net investments in leases.

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