United States

Recent tentative FASB decisions regarding credit losses standard

FINANCIAL REPORTING INSIGHTS  | 

In June 2016 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced a new model for determining the allowance for credit losses known as CECL (current expected credit loss). The effective dates of ASU 2016-13 are as follows:

  • Public business entities (PBEs) that are SEC filers: Fiscal years beginning after December 15, 2019, including interim periods within those years
  • PBEs other than SEC filers: Fiscal years beginning after December 15, 2020, including interim periods within those years
  • All other entities (non-PBEs): Fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021

During its July 25, 2018 meeting, the FASB tentatively decided to propose an ASU that, if finalized, would amend the effective date of ASU 2016-13 for non-PBEs by requiring non-PBEs to adopt the standard for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The proposal also would clarify the FASB’s original intent to exclude operating lease receivables from the scope of Subtopic 326-20.

The Transition Resource Group (TRG) continues to meet periodically to discuss potential issues arising from the implementation of the credit losses standard. Subsequent to each TRG meeting, the FASB determines what action, if any, will be taken on each issue.

Further information about ASU 2016-13 is available in our whitepapers, New credit losses standard in a nutshell, and Financial instruments: In-depth analysis of new standard on credit losses.