A guide to accounting for investments, loans and other receivables

Jan 03, 2023
Financial assets Financial management Financial institutions
Financial reporting CECL Technical accounting Audit

Our publication, A guide to accounting for investments, loans and other receivables, provides an overview of the accounting for investments in debt and equity securities, loans (from a creditor’s perspective) and other receivables, and is organized as follows:

  • Chapter 1: Overview
  • Chapter 2: Accounting for equity securities (including certain options and forward contracts to purchase equity securities)
  • Chapter 3: Accounting for debt securities (including certain options and forward contracts to purchase debt securities)
  • Chapter 4: Recognition of credit losses on AFS debt securities
  • Chapter 5: Accounting for loans and other receivables
  • Chapter 6: Recognition and measurement of credit losses on financial assets measured at amortized cost and off-balance-sheet credit exposures
  • Chapter 7: Fair value option
  • Chapter 8: Presentation and disclosure considerations
  • Appendix A: Definitions, acronyms and literature references
  • Appendix B: SAB Topic 6.M. Financial Reporting Release No. 28
  • Appendix C: Summary of significant changes since last edition

Chapter 1 provides an overview of the accounting standards updates (ASUs) affecting the accounting for financial assets issued by the Financial Accounting Standards Board (FASB) in recent years, including (but not limited to) ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, and ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, including subsequently issued ASUs that amended and clarified that new guidance. Chapter 1 also provides a comparison of legacy and amended U.S. generally accepted accounting principles to International Financial Reporting Standards for certain types of financial instruments. Each of the remaining chapters begins with a more in-depth summary of the key changes made by the FASB in recent years and then goes on to explain the FASB’s guidance on a particular topic as amended for all recent changes.

The latest edition of our guide has been updated to clarify and expand our interpretive guidance and illustrative examples and to incorporate additional guidance from the FASB Codification. We have also updated the guide to reflect the issuance of the following FASB ASUs:

  • ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force)
  • ASU 2020-02, Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)
  • ASU 2020-03, Codification Improvements to Financial Instruments
  • ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs
  • ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Trouble Debt Restructurings and Vintage Disclosures

A summary of the significant changes made in this edition can be found in Appendix C of the guide. For those entities that have not yet adopted the ASUs listed above, including those seeking guidance on accounting for troubled debt restructurings prior to ASU 2022-02, refer to the previous edition of our guide available here.

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