This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

FASB Deliberates Matters Related to Disclosures About Credit Quality and the Allowance for Credit Losses

Published on: 09 Jun 2010

Today, the FASB deliberated four items related to the soon-to-be finalized Accounting Standards Update (ASU) Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which is expected to be issued by the end of this month. (Note that conclusions of the FASB are subject to change at future meetings and generally do not affect current accounting requirements until an official position (i.e., an ASU) is issued. Official positions are determined only after extensive deliberation and due process, including a formal vote.)

The Board agreed to the following:

1. Purchased impaired loans (PCI):

  • Exclude PCI loans from disclosures about:
    • Nonaccrual status.
    • Past due receivables.
    • Modifications.
  • Include PCI loans in the disclosures about credit-quality indicators.
  • Require each portfolio segment’s ending balance of the allowance for credit losses and the related financing receivables to be disaggregated on the basis of three impairment methods:
    • Loans collectively evaluated for impairment.
    • Loans individually evaluated for impairment.
    • Purchased credit impaired loans.

2. Aging disclosures for impaired loans — Require impaired loans that are individually evaluated for impairment to be included in the following disclosures:

  • Amounts on nonaccrual status.
  • Past due aging analysis.
  • Amounts past due 90 days or more and still accruing.

3. Troubled debt restructurings and other significant modifications — Include lease modifications in the scope of modification disclosures that involve a concession related to credit quality.

4. Effective Date — The proposed disclosures that include information for activity within a reporting period would be effective for the interim and annual periods beginning after December 15, 2010. Those disclosures include:

  • The activity in the allowance for credit losses for each period.
  • Disclosures about modifications of financing receivables.

All other disclosures, i.e., those that relate to information as of the end of a reporting period, should continue to apply without change in the effective date (i.e., for public entities those disclosures will be effective for the interim or annual reporting periods ending on or after December 15, 2010).

Accounting Journal Entries Image

Related Topics

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.