Handbook: Credit impairment

In-depth guidance on, and interpretation of, ASC 326. This latest edition includes new interpretations and examples based on our experience with companies implementing the standard; plus a new chapter on business combinations and asset acqusitions.

Applicability

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

Relevant dates

The FASB has issued guidance 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-profits and employee benefit plans.

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

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
• New: Business combinations and asset acquisitions 
• Off-balance sheet credit exposures
• 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

Handbook: Derivatives and hedging 

Handbook: Financial instruments recognition and measurement

Defining Issues: FASB proposes amendment on TDRs and vintage disclosures