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Credit losses TRG holds first meeting

  • FASB meeting Image

Apr 05, 2016

At its April 1, 2016, meeting, the FASB’s credit losses transition resource group (TRG) discussed various aspects of the draft measurement guidance from the upcoming standard — which will be codified in ASC 326-20 — to ensure that the guidance is understandable and operational and reflects the Board’s decisions to date.

The discussion included the TRG’s observations on how an entity would estimate expected credit losses on loans, specifically with respect to the draft measurement guidance stating that an entity:

  • May use various methods to determine its expectation of credit losses.
  • “[W]ill not be required to forecast conditions over the entire life of a financial asset.“
  • “[H]as flexibility to determine the historical loss information to which it would revert and the method of reversion.“
  • “[S]hould incorporate information [into] its expectations of credit losses that [is] relevant to the entity and accessible without undue cost or effort“; external information that is “less relevant than an entity’s own internal information“ would be excluded.

The TRG agreed that these concepts from the draft measurement guidance are clear.

For more in­for­ma­tion, see De­loitte’s TRG Snap­shot.

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