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Accounting Spotlight — Current expected credit losses — Complexities for commercial entities

Published on: 20 Nov 2019

This Accounting Spotlight discusses the complexities that many commercial entities may encounter when applying the FASB’s new current expected credit loss (CECL) standard, particularly the standard’s new impairment model in ASC 326-20 (the “CECL model”). Relevant considerations for a commercial entity include (1) leveraging current processes to determine expected credit losses in a manner consistent with the CECL model, (2) determining whether certain types of assets (e.g., vendor rebates and refundable customer advances) are within the scope of the CECL model, and (3) providing sufficient documentation to support all judgments and decisions related to the entity’s implementation of the new CECL standard.


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