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ASC 326 — Financial Instruments — Credit Losses

ASC 326, Financial Instruments — Credit Losses, was added by ASU 2016-13 on June 16, 2016. For public business entities that are SEC filers, it is effective for annual periods beginning after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods therein. For other public business entities, ASC 326 will be effective for annual periods beginning after December 15, 2020 (i.e., calendar periods beginning on January 1, 2021), and interim periods therein. For all other entities, including not-for-profit entities and employee benefit plans, it is effective date for fiscal years beginning after December 15, 2020, and interim periods thereafter. Early adoption is permitted for all entities as of the fiscal years beginning after December 15, 2018, and interim periods therein.

Overview

The full text of ASC 326 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

ASC 326 provides guidance on how an entity should measure credit losses on financial instruments and comprises three subtopics (Overall, Measured at Amortized Cost, and Available-for-Sale Debt Securities). Below is an overview of each subtopic.

326-10 Overall

ASC 326-10 provides definitions for terms used within ASC 326 and it provides information on the transition requirements for ASU 2016-13.

326-20 Measured at Amortized Cost

ASC 326-20 provides guidance on "how an entity should measure expected credit losses on financial instruments measured at amortized cost and on leases." The guidance is applicable to financial assets measured at amortized cost, net investments in leases recognized by a lessor in accordance with ASC 842, and off-balance-sheet credit exposures not accounted for as insurance.

326-30 Available-for-Sale Debt Securities

ASC 326-30 provides guidance on "how an entity should measure credit losses on available-for-sale debt securities." The guidance is also applicable to loans that meet the definition of debt securities and are classified as available-for-sale.

Content from the FASB Accounting Standards Codification® included at http://www.usgaapplus.com is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

The following ASUs amended the guidance in this Topic:

Proposed FASB Accounting Standards Updates

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.