{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/326/20/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"326","topic_title":"Financial Instruments—Credit Losses","subtopic":"326-20","subtopic_title":"Measured at Amortized Cost","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"326-20-55-1","para":"55-1","html":"
This Section provides implementation guidance for management's estimate of expected credit losses on financial asset(s). This Section is organized as follows:
  1. a
    Information considered when estimating expected credit losses
  2. b
    Developing an estimate of expected credit losses
  3. c
    Net investment in leases
  4. d
    Effect of a fair value hedge on the discount rate when using a discounted cash flow model.
","snippet":"This Section provides implementation guidance for management's estimate of expected credit losses on financial asset(s). This Section is organized as follows:\n(a) Information considered when estimating expected credit lo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b82f418b6931db2dc0c8f9c0a1f10569a7089292743c48435543bb4c4745369d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-2","para":"55-2","html":"
In determining its estimate of expected credit losses, an entity should evaluate information related to the borrower's creditworthiness, changes in its lending strategies and underwriting practices, and the current and forecasted direction of the economic and business environment. This Subtopic does not specify a particular methodology to be applied by an entity for determining historical credit loss experience. That methodology may vary depending on the size of the entity, the range of the entity's activities, the nature of the entity's financial assets, and other factors.
","snippet":"In determining its estimate of expected credit losses, an entity should evaluate information related to the borrower's creditworthiness, changes in its lending strategies and underwriting practices, and the current and f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2d6c94caedec57a050532decffd202a3392620f9db5c5558eddb67ecb484cda","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-3","para":"55-3","html":"
Historical loss information generally provides a basis for an entity's assessment of expected credit losses. An entity may use historical periods that represent management's expectations for future credit losses. An entity also may elect to use other historical loss periods, adjusted for current conditions, and other reasonable and supportable forecasts. When determining historical loss information in estimating expected credit losses, the information about historical credit loss data, after adjustments for current conditions and reasonable and supportable forecasts, should be applied to pools that are defined in a manner that is consistent with the pools for which the historical credit loss experience was observed.
","snippet":"Historical loss information generally provides a basis for an entity's assessment of expected credit losses. An entity may use historical periods that represent management's expectations for future credit losses. An enti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b478cec33ae11da49cf68fe3b56ee1055fe08e380ad3305d2e83e236c3a28b4","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-4","para":"55-4","html":"
Because historical experience may not fully reflect an entity's expectations about the future, management should adjust historical loss information, as necessary, to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information. In making this determination, management should consider characteristics of the financial assets that are relevant in the circumstances. To adjust historical credit loss information for current conditions and reasonable and supportable forecasts, an entity should consider significant factors that are relevant to determining the expected collectibility. Examples of factors an entity may consider include any of the following, depending on the nature of the asset (not all of these may be relevant to every situation, and other factors not on the list may be relevant):
  1. a
    The borrower's financial condition, credit rating, credit score, asset quality, or business prospects
  2. b
    The borrower's ability to make scheduled interest or principal payments
  3. c
    The remaining payment terms of the financial asset(s)
  4. d
    The remaining time to maturity and the timing and extent of prepayments on the financial asset(s)
  5. e
    The nature and volume of the entity's financial asset(s)
  6. f
    The volume and severity of past due financial asset(s) and the volume and severity of adversely classified or rated financial asset(s)
  7. g
    The value of underlying collateral on financial assets in which the collateral-dependent practical expedient has not been utilized
  8. h
    The entity's lending policies and procedures, including changes in lending strategies, underwriting standards, collection, writeoff, and recovery practices, as well as knowledge of the borrower's operations or the borrower's standing in the community
  9. i
    The quality of the entity's credit review system
  10. j
    The experience, ability, and depth of the entity's management, lending staff, and other relevant staff
  11. k
    The environmental factors of a borrower and the areas in which the entity's credit is concentrated, such as:
    1. 1
      Regulatory, legal, or technological environment to which the entity has exposure
    2. 2
      Changes and expected changes in the general market condition of either the geographical area or the industry to which the entity has exposure
    3. 3
      Changes and expected changes in international, national, regional, and local economic and business conditions and developments in which the entity operates, including the condition and expected condition of various market segments.
","snippet":"Because historical experience may not fully reflect an entity's expectations about the future, management should adjust historical loss information, as necessary, to reflect the current conditions and reasonable and supp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ece9da37c502708b65836180a451a5c542c32fd8d93a11018ed8675f746ea1e5","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-5","para":"55-5","html":"
In evaluating financial assets on a collective (pool) basis, an entity should aggregate financial assets on the basis of similar risk characteristics, which may include any one or a combination of the following (the following list is not intended to be all inclusive):
  1. a
    Internal or external (third-party) credit score or credit ratings
  2. b
    Risk ratings or classification
  3. c
    Financial asset type
  4. d
    Collateral type
  5. e
    Size
  6. f
    Effective interest rate
  7. g
    Term
  8. h
    Geographical location
  9. i
    Industry of the borrower
  10. j
    Vintage
  11. k
    Historical or expected credit loss patterns
  12. l
    Reasonable and supportable forecast periods.
","snippet":"In evaluating financial assets on a collective (pool) basis, an entity should aggregate financial assets on the basis of similar risk characteristics, which may include any one or a combination of the following (the foll…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff5e494273d2f762a3437815ee11ba047bbc289c181891a67728eed74fea5555","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-6","para":"55-6","html":"
Estimating expected credit losses is highly judgmental and generally will require an entity to make specific judgments. Those judgments may include any of the following:
  1. a
    The definition of default for default-based statistics
  2. b
    The approach to measuring the historical loss amount for loss-rate statistics, including whether the amount is simply based on the amortized cost amount written off and whether there should be adjustments to historical credit losses (if any) to reflect the entity's policies for recognizing accrued interest
  3. c
    The approach to determine the appropriate historical period for estimating expected credit loss statistics
  4. d
    The approach to adjusting historical credit loss information to reflect current conditions and reasonable and supportable forecasts that are different from conditions existing in the historical period
  5. e
    The methods of utilizing historical experience
  6. f
    The method of adjusting loss statistics for recoveries
  7. g
    How expected prepayments affect the estimate of expected credit losses
  8. h
    How the entity plans to revert to historical credit loss information for periods beyond which the entity is able to make or obtain reasonable and supportable forecasts of expected credit losses
  9. i
    The assessment of whether a financial asset exhibits risk characteristics similar to other financial assets.
","snippet":"Estimating expected credit losses is highly judgmental and generally will require an entity to make specific judgments. Those judgments may include any of the following:\n(a) The definition of default for default-based st…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93e88832097512c8e0f6ac36e2c57af2bf5c8a25af475932a5b201cc86d0ff48","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-7","para":"55-7","html":"
Because of the subjective nature of the estimate, this Subtopic does not require specific approaches when developing the estimate of expected credit losses. Rather, an entity should use judgment to develop estimation techniques that are applied consistently over time and should faithfully estimate the collectibility of the financial assets by applying the principles in this Subtopic. An entity should utilize estimation techniques that are practical and relevant to the circumstance. The method(s) used to estimate expected credit losses may vary on the basis of the type of financial asset, the entity's ability to predict the timing of cash flows, and the information available to the entity.
","snippet":"Because of the subjective nature of the estimate, this Subtopic does not require specific approaches when developing the estimate of expected credit losses. Rather, an entity should use judgment to develop estimation tec…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eedf56a8a5547561e3ac638001d5aa1b7f107bb6d0b169b748c492ca4763b620","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-8","para":"55-8","html":"
This Subtopic requires that an entity recognize an allowance for credit losses on net investment in leases recognized by a lessor in accordance with Topic 842 on leases. An entity should include the unguaranteed residual asset with the lease receivable, net of any deferred selling profit, if applicable (that is, the net investment in the lease). When measuring expected credit losses on net investment in leases, the lease term should be used as the contractual term. When measuring expected credit losses on net investment in leases using a discounted cash flow method, the discount rate used in measuring the lease receivable under Topic 842 should be used in place of the effective interest rate.
","snippet":"This Subtopic requires that an entity recognize an allowance for credit losses on net investment in leases recognized by a lessor in accordance with Topic 842 on leases. An entity should include the unguaranteed residual…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d853ae8e311be8f53e2fc83ab0176d37bd459ff7a1aa99141ad06874dcefde21","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-9","para":"55-9","html":"
Section 815-25-35 implicitly affects the measurement of credit losses under this Topic by requiring the present value of expected future cash flows to be discounted by the new effective interest rate based on the adjusted amortized cost basis in a hedged loan. When the amortized cost basis of a loan has been adjusted under fair value hedge accounting, the effective interest rate is the discount rate that equates the present value of the loan's future cash flows with that adjusted amortized cost basis. The adjustment under fair value hedge accounting of the loan's carrying amount for changes in fair value attributable to the hedged risk under Section 815-25-35 shall be considered to be an adjustment of the loan's amortized cost basis. Paragraph 815-25-35-11 explains that the loan's original effective interest rate becomes irrelevant once the recorded amount of the loan is adjusted for any changes in its fair value. Paragraph 815-25-35-11 also explains that an entity should not adjust the amortized cost basis or the discount rate of the individual assets or individual beneficial interest included in the closed portfolio for a basis adjustment that is maintained on the closed portfolio basis in accordance with paragraph 815-25-35-1(c).
","snippet":"Section 815-25-35 implicitly affects the measurement of credit losses under this Topic by requiring the present value of expected future cash flows to be discounted by the new effective interest rate based on the adjuste…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d03ad1c63d33ceb87d655e67760e5b226bfba4f3db8299514bd3e26b9112e906","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-10","para":"55-10","html":"
This implementation guidance addresses the meaning of the term portfolio segment. All of the following are examples of portfolio segments:
  1. a
    Type of financing receivable
  2. b
    Industry sector of the borrower
  3. c
    Risk rating.
","snippet":"This implementation guidance addresses the meaning of the term portfolio segment. All of the following are examples of portfolio segments:\n(a) Type of financing receivable\n(b) Industry sector of the borrower\n(c) Risk rat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:edc073b3db8961bbd95f52376affd5bef5291ff1965a8e692a5bf28f4a1d6838","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-11","para":"55-11","html":"
This implementation guidance addresses application of the term class of financing receivable. An entity should base its principal determination of class of financing receivable by disaggregating to the level that the entity uses when assessing and monitoring the risk and performance of the portfolio for various types of financing receivables. In its assessment, the entity should consider the risk characteristics of the financing receivables.
","snippet":"This implementation guidance addresses application of the term class of financing receivable. An entity should base its principal determination of class of financing receivable by disaggregating to the level that the ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:614f0e0d6b47043e80f6a1fabcd0b22dedd60749c5abaa337e1c1b8a13a65944","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-12","para":"55-12","html":"
In determining the appropriate level of its internal reporting to use as a basis for disclosure, an entity should consider the level of detail needed by a user to understand the risks inherent in the entity's financing receivables. An entity could further disaggregate its financing receivables portfolio by considering numerous factors. Examples of factors that the entity should consider include any of the following:
  1. a
    Categorization of borrowers, such as any of the following:
    1. 1
      Commercial loan borrowers
    2. 2
      Consumer loan borrowers
    3. 3
      Related party borrowers.
  2. b
    Type of financing receivable, such as any of the following:
    1. 1
      Mortgage loans
    2. 2
      Credit card loans
    3. 3
      Interest-only loans
    4. 4
      Finance leases.
  3. c
    Industry sector, such as either of the following:
    1. 1
      Real estate
    2. 2
      Mining.
  4. d
    Type of collateral, such as any of the following:
    1. 1
      Residential property
    2. 2
      Commercial property
    3. 3
      Government-guaranteed collateral
    4. 4
      Uncollateralized (unsecured) financing receivables.
  5. e
    Geographic distribution, including both of the following:
    1. 1
      Domestic
    2. 2
      International.
","snippet":"In determining the appropriate level of its internal reporting to use as a basis for disclosure, an entity should consider the level of detail needed by a user to understand the risks inherent in the entity's financing r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd71023dbdad320f9b929370c752de82047eef613a4a96b3e90eb4e36e1b0189","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-13","para":"55-13","html":"
An entity also may consider factors related to concentrations of credit risk as discussed in Section 825-10-55.
","snippet":"An entity also may consider factors related to concentrations of credit risk as discussed in Section 825-10-55.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01a18cef4c254466b313dc05000775f1e8f95c3406095817821379a1da087ad3","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-14","para":"55-14","html":"
Classes of financing receivables generally are a disaggregation of a portfolio segment. For determining the appropriate classes of financing receivables that are related to a portfolio segment, the portfolio segment is the starting point with further disaggregation in accordance with the guidance in paragraphs
326-20-55-11 through 55-13
. The determination of class for financing receivables that are not related to a portfolio segment (because there is no associated allowance) also should be based on the guidance in those paragraphs.
","snippet":"Classes of financing receivables generally are a disaggregation of a portfolio segment. For determining the appropriate classes of financing receivables that are related to a portfolio segment, the portfolio segment is t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d0017ad5079d5cce9b8881837367acb2058874b21889f47f8877bcc49feebb6","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-15","para":"55-15","html":"
This implementation guidance addresses application of the term credit quality indicator. Examples of credit quality indicators include all of the following:
  1. a
    Consumer credit risk scores
  2. b
    Credit-rating-agency ratings
  3. c
    An entity's internal credit risk grades
  4. d
    Debt-to-value ratios
  5. e
    Collateral
  6. f
    Collection experience
  7. g
    Other internal metrics.
","snippet":"This implementation guidance addresses application of the term credit quality indicator. Examples of credit quality indicators include all of the following:\n(a) Consumer credit risk scores\n(b) Credit-rating-agency rating…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05e7352f3a62b3b72dd23aa5a1fd6513c7ee04f2420b7e4bca6cccf519d64dfd","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-16","para":"55-16","html":"
An entity should use judgment in determining the appropriate credit quality indicator for each class of financing receivable and major security type. As of the balance sheet date, the entity should use the most current information it has obtained for each credit quality indicator.
","snippet":"An entity should use judgment in determining the appropriate credit quality indicator for each class of financing receivable and major security type. As of the balance sheet date, the entity should use the most current i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:82b83690b88c241744360333baf6235a13444a4633947695fcbcccdbd1aecee7","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a7a546c9e21bd9dafb06527dafc9dca83c14c61e52b55d55807554a3a05e739","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"326-20-55-17","para":"55-17","html":"
The following Examples illustrate certain initial and subsequent measurement guidance in this Subtopic to account for expected credit losses on financial assets:
  1. a
    Example 1: Estimating expected credit losses using a loss-rate approach (collective evaluation)
  2. b
    Example 2: Estimating expected credit losses using a loss-rate approach (individual evaluation)
  3. c
    Example 3: Estimating expected credit losses on a vintage-year basis
  4. d
    Example 4: Estimating expected credit losses using both a collective method and an individual asset method
  5. e
    Example 5: Estimating expected credit losses for trade receivables using an aging schedule
  6. f
    Example 6: Estimating expected credit losses—practical expedient for collateral-dependent financial assets
  7. g
    Example 7: Estimating expected credit losses—practical expedient for financial assets with collateral maintenance provisions
  8. h
    Example 8: Estimating expected credit losses when potential default is greater than zero, but expected nonpayment is zero
  9. i
    Example 9: Recognizing writeoffs and recoveries
  10. j
    Example 10: Applying expected credit losses to unconditionally cancellable loan commitments
  11. k
    Example 11: Identifying purchased financial assets with credit deterioration
  12. l
    Example 12: Recognizing purchased financial assets with credit deterioration
  13. m
    Example 13: Using a loss-rate approach for determining expected credit losses and the discount rate on a purchased financial asset with credit deterioration
  14. n
    Example 14: Using a discounted cash flow approach for determining expected credit losses and the discount rate on a purchased financial asset with credit deterioration
  15. o
    Example 15: Disclosing credit quality indicators of financing receivables by amortized cost basis
  16. p
    Example 16: Disclosing past-due status
  17. q
    Example 17: Identifying similar risk characteristics in reinsurance recoverables
  18. r
    Example 18: Determining the negative allowance for purchased financial assets with credit deterioration with no change in credit conditions
  19. s
    Example 19: Determining the negative allowance for purchased financial assets with credit deterioration after a change in credit conditions.
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6The following Examples illustrate certain initial and subsequent measurement guidance in this Subtopic to account for expected credit losses on financial assets:
  1. a
    Example 1: Estimating expected credit losses using a loss-rate approach (collective evaluation)
  2. b
    Example 2: Estimating expected credit losses using a loss-rate approach (individual evaluation)
  3. c
    Example 3: Estimating expected credit losses on a vintage-year basis
  4. d
    Example 4: Estimating expected credit losses using both a collective method and an individual asset method
  5. e
    Example 5: Estimating expected credit losses for trade receivables using an aging schedule
  6. ee
    Example 5A: Practical expedient and accounting policy election for estimating expected credit losses on current accounts receivable and current contract assets
  7. f
    Example 6: Estimating expected credit losses—practical expedient for collateral-dependent financial assets
  8. g
    Example 7: Estimating expected credit losses—practical expedient for financial assets with collateral maintenance provisions
  9. h
    Example 8: Estimating expected credit losses when potential default is greater than zero, but expected nonpayment is zero
  10. i
    Example 9: Recognizing writeoffs and recoveries
  11. j
    Example 10: Applying expected credit losses to unconditionally cancellable loan commitments
  12. k
    Example 11: Identifying purchased financial assets with credit deterioration
  13. l
    Example 12: Recognizing purchased financial assets with credit deterioration
  14. m
    Example 13: Using a loss-rate approach for determining expected credit losses and the discount rate on a purchased financial asset with credit deterioration
  15. n
    Example 14: Using a discounted cash flow approach for determining expected credit losses and the discount rate on a purchased financial asset with credit deterioration
  16. o
    Example 15: Disclosing credit quality indicators of financing receivables by amortized cost basis
  17. p
    Example 16: Disclosing past-due status
  18. q
    Example 17: Identifying similar risk characteristics in reinsurance recoverables
  19. r
    Example 18: Determining the negative allowance for purchased financial assets with credit deterioration with no change in credit conditions
  20. s
    Example 19: Determining the negative allowance for purchased financial assets with credit deterioration after a change in credit conditions.
","snippet":"The following Examples illustrate certain initial and subsequent measurement guidance in this Subtopic to account for expected credit losses on financial assets:\n(a) Example 1: Estimating expected credit losses using a l…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:872c2720de87d77fbfa36cf434e72fb9aec97b8981803b55ba173f001c4a1e6f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-18","para":"55-18","html":"
This Example illustrates one way an entity may estimate expected credit losses on a portfolio of loans with similar risk characteristics using a loss-rate approach.
","snippet":"This Example illustrates one way an entity may estimate expected credit losses on a portfolio of loans with similar risk characteristics using a loss-rate approach.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:701f8fb7bf7420af9ccd39f4f9e6b1c1101609e49bece6c46dc78c7fb3f55733","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-19","para":"55-19","html":"
Community Bank A provides 10-year amortizing loans to customers. Community Bank A manages those loans on a collective basis based on similar risk characteristics. The loans within the portfolio were originated over the last 10 years, and the portfolio has an amortized cost basis of $3 million.
","snippet":"Community Bank A provides 10-year amortizing loans to customers. Community Bank A manages those loans on a collective basis based on similar risk characteristics. The loans within the portfolio were originated over the l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe3355a27e7de745dc3ecb6bd941e1c0d7338ac591881958c8003a34480852f9","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-20","para":"55-20","html":"
After comparing historical information for similar financial assets with the current and forecasted direction of the economic environment, Community Bank A believes that its most recent 10-year period is a reasonable period on which to base its expected credit-loss-rate calculation after considering the underwriting standards and contractual terms for loans that existed over the historical period in comparison with the current portfolio. Community Bank A's historical lifetime credit loss rate (that is, a rate based on the sum of all credit losses for a similar pool) for the most recent 10-year period is 1.5 percent. The historical credit loss rate already factors in prepayment history, which it expects to remain unchanged. Community Bank A considered whether any adjustments to historical loss information in accordance with paragraph 326-20-30-8 were needed, before considering adjustments for current conditions and reasonable and supportable forecasts, but determined none were necessary.
","snippet":"After comparing historical information for similar financial assets with the current and forecasted direction of the economic environment, Community Bank A believes that its most recent 10-year period is a reasonable per…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d4696dde9c7cd3e86bc42e73b87cc6dbae2a8b68a6dafe72facfa967b61067d6","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-21","para":"55-21","html":"
In accordance with paragraph 326-20-55-4, Community Bank A considered significant factors that could affect the expected collectibility of the amortized cost basis of the portfolio and determined that the primary factors are real estate values and unemployment rates. As part of this analysis, Community Bank A observed that real estate values in the community have decreased and the unemployment rate in the community has increased as of the current reporting period date. Based on current conditions and reasonable and supportable forecasts, Community Bank A expects that there will be an additional decrease in real estate values over the next one to two years, and unemployment rates are expected to increase further over the next one to two years. To adjust the historical loss rate to reflect the effects of those differences in current conditions and forecasted changes, Community Bank A estimates a 10-basis-point increase in credit losses incremental to the 1.5 percent historical lifetime loss rate due to the expected decrease in real estate values and a 5-basis-point increase in credit losses incremental to the historical lifetime loss rate due to expected deterioration in unemployment rates. Management estimates the incremental 15-basis-point increase based on its knowledge of historical loss information during past years in which there were similar trends in real estate values and unemployment rates. Management is unable to support its estimate of expectations for real estate values and unemployment rates beyond the reasonable and supportable forecast period. Under this loss-rate method, the incremental credit losses for the current conditions and reasonable and supportable forecast (the 15 basis points) is added to the 1.5 percent rate that serves as the basis for the expected credit loss rate. No further reversion adjustments are needed because Community Bank A has applied a 1.65 percent loss rate where it has immediately reverted into historical losses reflective of the contractual term in accordance with paragraphs
326-20-30-8 through 30-9
. This approach reflects an immediate reversion technique for the loss-rate method.
","snippet":"In accordance with paragraph 326-20-55-4, Community Bank A considered significant factors that could affect the expected collectibility of the amortized cost basis of the portfolio and determined that the primary factors…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3088179e249c4d2aba903061b889ab5210ddacbf9a88aa57c08035d734d781f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-22","para":"55-22","html":"
The expected loss rate to apply to the amortized cost basis of the loan portfolio would be 1.65 percent, the sum of the historical loss rate of 1.5 percent and the adjustment for the current conditions and reasonable and supportable forecast of 15 basis points. The allowance for expected credit losses at the reporting date would be $49,500.
","snippet":"The expected loss rate to apply to the amortized cost basis of the loan portfolio would be 1.65 percent, the sum of the historical loss rate of 1.5 percent and the adjustment for the current conditions and reasonable and…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f13128e5ccd7dd821a22531860d5e360920040dae41a04c1cb32002e0e69f728","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-23","para":"55-23","html":"
This Example illustrates one way an entity may estimate expected credit losses on an individual loan using a loss-rate approach when no loans with similar risk characteristics exist.
","snippet":"This Example illustrates one way an entity may estimate expected credit losses on an individual loan using a loss-rate approach when no loans with similar risk characteristics exist.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2bb18d3439a6040795c4173b69c58e756f46b6e52a10ca74a64c4b4ac0ec89f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-24","para":"55-24","html":"
Community Bank B principally provides residential real estate loans to borrowers in the community. In the current year, Community Bank B expanded a program to originate commercial loans. Community Bank B has a few commercial loans outstanding at period end. In evaluating the loans, Community Bank B determines that one of the commercial loans does not share similar risk characteristics with other loans outstanding; therefore, Community Bank B believes that it is inappropriate to pool this commercial loan for purposes of determining its allowance for credit losses. This commercial loan has an amortized cost of $1 million. Historical loss information for commercial loans in the community with similar risk characteristics shows a 0.50 percent loss rate over the contractual term.
","snippet":"Community Bank B principally provides residential real estate loans to borrowers in the community. In the current year, Community Bank B expanded a program to originate commercial loans. Community Bank B has a few commer…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3909eb837e62cd3955cbca4fb86281ac8b8cdf99e4234ee11bdd651df41b164e","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-25","para":"55-25","html":"
Community Bank B considers relevant current conditions and reasonable and supportable forecasts that relate to its lending practices and environment and the specific borrower. Community Bank B determines that the significant factors affecting the performance of this loan are borrower-specific operating results and local unemployment rates. Community Bank B considers other qualitative factors including national macroeconomic conditions but determines that they are not significant inputs to the loss estimates for this loan.
","snippet":"Community Bank B considers relevant current conditions and reasonable and supportable forecasts that relate to its lending practices and environment and the specific borrower. Community Bank B determines that the signifi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0b5dfb20f6a9e1af29809e254aa7ab88d0754a4bd60140575bbeaf5ee4cce18","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-26","para":"55-26","html":"
Community Bank B is able to reasonably forecast local unemployment rates and borrower-specific financial results for one year only. Community Bank B's reasonable and supportable forecasts of those factors indicate that local unemployment rates are expected to remain stable (based on the main employer in the community continuing to operate normally) and that there will be a deterioration in the borrower's financial results (based on an evaluation of rent rolls). Management determines that no adjustment is necessary for local unemployment rates because they are expected to be consistent with the conditions in the 0.50 percent loss-rate estimate. However, the current and forecasted conditions related to borrower-specific financial results are different from the conditions in the 0.50 percent loss-rate estimate, based on borrower-specific information. Community Bank B determines that an upward adjustment of 10 basis points that is incremental to the historical lifetime loss information is appropriate based on those factors. Management estimates the 10-basis-point adjustment based on its knowledge of commercial loan loss history in the community when borrowers exhibit similar declines in financial performance. Management is unable to support its estimate of expectations for local unemployment and borrower-specific financial results beyond the reasonable and supportable forecast period. Under this loss-rate method, Community Bank B applies the same immediate reversion technique as in Example 1, where Community Bank B has immediately reverted into historical losses reflective of the contractual term in accordance with paragraphs
326-20-30-8 through 30-9
.
","snippet":"Community Bank B is able to reasonably forecast local unemployment rates and borrower-specific financial results for one year only. Community Bank B's reasonable and supportable forecasts of those factors indicate that l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:140bcc3d82ded6d4cafecf7e183d8007191892fcb6264854894ea6e042e23bfc","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-27","para":"55-27","html":"
The historical loss rate to apply to the amortized cost basis of the individual loan would be adjusted an incremental 10 basis points to 0.60 percent. The allowance for expected credit losses for the reporting period date would be $6,000.
","snippet":"The historical loss rate to apply to the amortized cost basis of the individual loan would be adjusted an incremental 10 basis points to 0.60 percent. The allowance for expected credit losses for the reporting period dat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06c68e9d4c5f502fbed1df3eef96521f4f38e33d1fda0a26d2f5a51915364ca7","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-28","para":"55-28","html":"
The following Example illustrates one way an entity might estimate the expected credit losses on a vintage-year basis.
","snippet":"The following Example illustrates one way an entity might estimate the expected credit losses on a vintage-year basis.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:17b1b28a88045cd806be08fa3b63010a63e029599e8dee4578280a7e1654b835","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-29","para":"55-29","html":"
Bank C is a lending institution that provides financing to consumers purchasing new or used farm equipment throughout the local area. Bank C originates approximately the same amount of loans each year. The four-year amortizing loans it originates are secured by collateral that provides a relatively consistent range of loan-to-collateral-value ratios at origination. If a borrower becomes 90 days past due, Bank C repossesses the underlying farm equipment collateral for sale at auction.
","snippet":"Bank C is a lending institution that provides financing to consumers purchasing new or used farm equipment throughout the local area. Bank C originates approximately the same amount of loans each year. The four-year amor…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e03184ad8bebe5d2b52ac5a3d5f3f770129de77fda3b639c56bc461c5f707410","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-30","para":"55-30","html":"
Bank C tracks those loans on the basis of the calendar year of origination. The following pattern of credit loss information has been developed (represented by the nonshaded cells in the accompanying table) based on the amount of amortized cost basis in each vintage that was written off as a result of credit losses.
","snippet":"Bank C tracks those loans on the basis of the calendar year of origination. The following pattern of credit loss information has been developed (represented by the nonshaded cells in the accompanying table) based on the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0b957cd6b4fc992561f4047bcaf27988485fe4f0d42186f49ac9870546179943","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-31","para":"55-31","html":"
In estimating expected credit losses on the remaining outstanding loans at December 31, 20X9, Bank C considers its historical loss information. It notes that the majority of losses historically emerge in Year 2 and Year 3 of the loans. It notes that historical loss experience has worsened since 20X3 and that loss experience for loans originated in 20X6 has already equaled the loss experience for loans originated in 20X5 despite the fact that the 20X6 loans will be outstanding for one additional year as compared with those originated in 20X5. In considering current conditions and reasonable and supportable forecasts, Bank C notes that there is an oversupply of used farm equipment in the resale market that is expected to continue, thereby putting downward pressure on the resulting collateral value of equipment. It also notes that severe weather in recent years has increased the cost of crop insurance and that this trend is expected to continue. On the basis of those factors, Bank C determines adjustments to historical loss information for current conditions and reasonable and supportable forecasts. The remaining expected losses (represented by the shaded cells in the table in paragraph 326-20-55-30 in each respective year) reflect those adjustments, and Bank C arrives at expected losses of $60, $260, $430, and $510 for loans originated in 20X6, 20X7, 20X8, and 20X9, respectively. Therefore, the allowance for credit losses for the reporting period date would be $1,260.
","snippet":"In estimating expected credit losses on the remaining outstanding loans at December 31, 20X9, Bank C considers its historical loss information. It notes that the majority of losses historically emerge in Year 2 and Year …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a8a6a3ce07d137ce214a1d0aaebbf3060ded2a117f6e6ed7d2238d8dbdcf2ed","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-32","para":"55-32","html":"
This Example illustrates a situation in which loans with credit deterioration are evaluated individually because they no longer exhibit risk characteristics similar to other loans. There is no requirement to evaluate financial assets individually when a certain level of credit deterioration has occurred. However, the assessment of whether financial assets exhibit similar risk characteristics should be based on the relevant and appropriate facts and circumstances.
","snippet":"This Example illustrates a situation in which loans with credit deterioration are evaluated individually because they no longer exhibit risk characteristics similar to other loans. There is no requirement to evaluate fin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:605cd2472858176abde9f604be13395a1c974e1901bd8049174fb5ad32bc3e4f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-33","para":"55-33","html":"
An entity may estimate expected credit losses for some financial assets on a collective (pool) basis and may estimate expected credit losses for other assets on an individual basis when similar risk characteristics do not exist. As a result, the method used to estimate expected credit losses for a financial asset may change over time. For example, a pool of homogeneous loans may initially use a loss-rate method, but certain individual loans no longer may have similar risk characteristics because of credit deterioration. When a financial asset no longer shares similar risk characteristics with the original pool of financial assets, an entity should evaluate that financial asset to determine whether it shares risk characteristics similar to other pools of loans. Expected credit losses of that financial asset should be measured individually if there are no similar risk characteristics with other loans. A discounted cash flow approach is one method to estimate expected credit losses of individual loans, but it is not a required method. Paragraphs
326-20-55-34 through 55-36
illustrate those concepts.
","snippet":"An entity may estimate expected credit losses for some financial assets on a collective (pool) basis and may estimate expected credit losses for other assets on an individual basis when similar risk characteristics do no…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0b80249d2701fd3c9636614906b4a5ffb52f746ddf2a26462beda460b2370e7d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-34","para":"55-34","html":"
One loan program from Bank D provides unsecured commercial loans of up to $75,000 to small businesses and entrepreneurs. Given the relative homogeneity of the borrowers (in terms of credit risk) and loans (in terms of type, amount, and underwriting standards) in the program, Bank D manages this loan program on a collective basis. However, Bank D concludes that the loss estimates for loans with credit deterioration is based on borrower-specific facts and circumstances because the repayment of those loans depends on facts and circumstances unique to each borrower. Therefore, Bank D estimates expected credit losses on an individual basis for loans that no longer exhibit similar risk characteristics because of credit deterioration. A loss-rate method for estimating expected credit losses on a pooled basis is applied for the loans in the portfolio segment that continue to exhibit similar risk characteristics.
","snippet":"One loan program from Bank D provides unsecured commercial loans of up to $75,000 to small businesses and entrepreneurs. Given the relative homogeneity of the borrowers (in terms of credit risk) and loans (in terms of ty…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8452c5eaf047f502b7a2dca159a6f8c26ae6df1ba35f832e267fc3e6a9b96438","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-35","para":"55-35","html":"
To estimate expected credit losses for individual loans without similar risk characteristics, Bank D uses a discounted cash flow method for each loan. Frequently, Bank D has insight into the likelihood of a credit loss as a result of information provided by the borrower and recent discussions with the borrower given the elevated credit risk for these loans. Under a discounted cash flow method, the allowance for credit losses is estimated as the difference between the amortized cost basis and the present value of cash flows expected to be collected.
","snippet":"To estimate expected credit losses for individual loans without similar risk characteristics, Bank D uses a discounted cash flow method for each loan. Frequently, Bank D has insight into the likelihood of a credit loss a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3b7d5e86f06e6d8c104215e5626001a476380f9540e8966137f3b37fbeeda85","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-36","para":"55-36","html":"
To estimate expected credit losses for the remainder of the loans that continue to exhibit similar risk characteristics, Bank D considers historical loss information (updated for current conditions and reasonable and supportable forecasts that affect the expected collectibility of the amortized cost basis of the pool) using a loss-rate approach.
","snippet":"To estimate expected credit losses for the remainder of the loans that continue to exhibit similar risk characteristics, Bank D considers historical loss information (updated for current conditions and reasonable and sup…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89813427a37a7c1836b0a840c87e12f34ecb645283875005d82161796414021f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-37","para":"55-37","html":"
This Example illustrates one way an entity may estimate expected credit losses for trade receivables using an aging schedule.
","snippet":"This Example illustrates one way an entity may estimate expected credit losses for trade receivables using an aging schedule.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:824847e87d9898853017b9e821964dbb688a864a76abaaac8ff81620352f2c75","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-38","para":"55-38","html":"
Entity E manufactures and sells products to a broad range of customers, primarily retail stores. Customers typically are provided with payment terms of 90 days with a 2 percent discount if payments are received within 60 days. Entity E has tracked historical loss information for its trade receivables and compiled the following historical credit loss percentages:
  1. a
    0.3 percent for receivables that are current
  2. b
    8 percent for receivables that are 1-30 days past due
  3. c
    26 percent for receivables that are 31-60 days past due
  4. d
    58 percent for receivables that are 61-90 days past due
  5. e
    82 percent for receivables that are more than 90 days past due.
","snippet":"Entity E manufactures and sells products to a broad range of customers, primarily retail stores. Customers typically are provided with payment terms of 90 days with a 2 percent discount if payments are received within 60…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:642ae237493a8b651f1d369023a69409c95e3cdb7754b437e3f77a830202f86d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-39","para":"55-39","html":"
Entity E believes that this historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit-loss percentages (that is, the similar risk characteristics of its customers and its lending practices have not changed significantly over time). However, Entity E has determined that the current and reasonable and supportable forecasted economic conditions have improved as compared with the economic conditions included in the historical information. Specifically, Entity E has observed that unemployment has decreased as of the current reporting date, and Entity E expects there will be an additional decrease in unemployment over the next year. To adjust the historical loss rates to reflect the effects of those differences in current conditions and forecasted changes, Entity E estimates the loss rate to decrease by approximately 10 percent in each age bucket. Entity E developed this estimate based on its knowledge of past experience for which there were similar improvements in the economy.
","snippet":"Entity E believes that this historical loss information is a reasonable base on which to determine expected credit losses for trade receivables held at the reporting date because the composition of the trade receivables …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a271501b26a9708374fae26d871c528b94c02d2e84a2e9d012cafbc1c48a9b6b","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40","para":"55-40","html":"
At the reporting date, Entity E develops the following aging schedule to estimate expected credit losses.
","snippet":"At the reporting date, Entity E develops the following aging schedule to estimate expected credit losses.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0e739af20c01bc3a434d4395c1494feaa2ea005018fc59eb55511731fbb02477","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40A","para":"55-40A","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6This Example illustrates how to apply the practical expedient and accounting policy election for estimating credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 on revenue from contracts with customers in accordance with paragraphs
326-20-30-10A through 30-10H
. The accounting policy election to consider subsequent collection activity described in paragraphs
326-20-30-10E through 30-10H
is applicable only to entities other than public business entities. Assume that Entity R is not a public business entity and does not have any contract assets.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6This Example illustrates how to apply the practical expedient and accounting policy election for estimating credit losses on curr…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4d3d680bb8f4be3a7af7b7f63174a327bc16cb236dfd21903a357567d7c4b2d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40B","para":"55-40B","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R manufactures and sells products to a broad range of customers that are primarily retail stores. Entity R provides customers with payment terms of 30 days. Entity R recognizes revenue and corresponding accounts receivable related to the sale of products in accordance with Topic 606 (referred to as \"receivable(s)\" in the remainder of this Example). Entity R monitors payment activity and, for purposes of estimating expected credit losses, classifies outstanding receivables on the basis of the number of days past due (delinquency) when a receivable has not been collected in accordance with the payment terms. Delinquent receivables are assessed to determine whether they continue to share similar risk characteristics with other receivables in the portfolio. Entity R uses its historical collection information to calculate a credit loss rate for each portfolio segment of receivables.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R manufactures and sells products to a broad range of customers that are primarily retail stores. Entity R provides custom…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f795f830c0cc9eccf10b31864bd813f5f166fee27c98208c90a4dd2a281e1ae5","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40C","para":"55-40C","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6On December 31, 20X0, the outstanding balance and historical credit loss rates for each portfolio segment of Entity R’s receivables are as follows.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6On December 31, 20X0, the outstanding balance and historical credit loss rates for each portfolio segment of Entity R’s receivabl…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6beecaf4da66afb0b3550c99647e599b56ff628baaf1362c4a9229d4d4ce57f2","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40D","para":"55-40D","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R has determined that its historical loss rates are a reasonable basis on which to estimate expected credit losses for outstanding receivables because of the similar risk characteristics of its customers (paragraph 326-20-30-8) and because its payment terms have not changed significantly over time. Management determined that current conditions as of the balance sheet date are consistent with conditions that existed during the period that historical data were collected.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R has determined that its historical loss rates are a reasonable basis on which to estimate expected credit losses for out…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df1c3e09340d64eee6281032bef309372f433f904b1f607b4be491ddd1869881","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40E","para":"55-40E","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R elects the practical expedient in paragraphs
326-20-30-10C through 30-10D
to estimate expected credit losses related to its receivables classified as current in accordance with paragraph 210-10-45-3. The practical expedient allows Entity R to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets. Entity R has determined that the current conditions as of the balance sheet date are consistent with those conditions that existed during the period that the historical data were collected. Accordingly, Entity R determines that no adjustment to its historical loss information is necessary. Entity R develops its estimate of expected credit losses as follows.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R elects the practical expedient in paragraphs 326-20-30-10C through 30-10D to estimate expected credit losses related to …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1a421611c7a74e0f4d72c10ae39a733eba6574585bc21c59cf9d488c5284f3c","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40F","para":"55-40F","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets in accordance with the requirement in paragraph 326-20-50-12A.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9c9d675127db3ea95ac171a220693ba6cc531d8a0a832d51affc589047375d24","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40G","para":"55-40G","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R has an outstanding receivable balance of $2,000 aged 30-days past due at the balance sheet date from Customer S, who filed for bankruptcy on December 15, 20X0. The entirety of the balance is not expected to be collected. As a result, Entity R determines that the receivable due from Customer S no longer shares similar risk characteristics with receivables due from other customers. Therefore, Entity R measures expected credit losses from Customer S individually.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R has an outstanding receivable balance of $2,000 aged 30-d…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6907d7a2f925f5f88b6df71243974260e9f644bb03259c00073965c72befb6e8","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40H","para":"55-40H","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of the remaining portfolio of receivables and estimates expected credit losses on the remaining portfolio collectively using the practical expedient. Entity R develops its estimate of expected credit losses as follows.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of the remaining portfolio of receiva…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2d5043cc0259f53c4fb82d2be6963e3e05e6a85c62413f14798ef2b194fd5ac","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40I","para":"55-40I","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets in accordance with the requirement in paragraph 326-20-50-12A.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:127c63bcbcc731318f35e7f93c99f2b5f1f74d1411548120c11f551911bcdd43","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40J","para":"55-40J","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R also elects to consider collection activity after the balance sheet date when estimating expected credit losses (that is, it elects to apply the accounting policy election in paragraphs
326-20-30-10E through 30-10H
). Entity R considers collection activity through March 1, 20X1, which is the date that the financial statements are available to be issued.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R also elects to consider collection activity after the bal…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d8c403defce8953bd12925651a53e00b4dec072761f7dd927ca04e29d8f82ca","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40K","para":"55-40K","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of its receivables other than the collection activity detailed in paragraph 326-20-55-40L. Entity R has not updated its historical credit loss rates for collection activity after the balance sheet date.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of its receivables other than the col…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a02bb10ed583a894c2ac94da5ea031c3b07aee4c40c31160e6e0e3564aa5834f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40L","para":"55-40L","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R’s December 31, 20X0 financial statements are available to be issued on March 1, 20X1. Entity R has observed the following subsequent collection activity for all outstanding receivables as of the balance sheet date (December 31, 20X0). Entity R develops its estimate of expected credit losses by determining which receivables have been collected between the balance sheet date and the date that the entity has selected to consider subsequent collection activity (in this Case, March 1, 20X1) and by recognizing an allowance for the amounts that are uncollected based on its historical loss rates as of the balance sheet date that correspond to the uncollected balance’s delinquency status as of the date the entity has selected to consider subsequent collection activity (in this Case, March 1, 20X1).
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R’s December 31, 20X0 financial statements are available to be issued on March 1, 20X1. Entity R has observed the followin…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb92cd54ce51dfde97b4d86b44e96be1786854c39a77cb3e8e02c02a03a99e7d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40M","para":"55-40M","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets and the accounting policy election to consider subsequent collection activity, along with the date through which collection activity was considered (in this Case, March 1, 20X1), in accordance with the requirements in paragraphs
326-20-50-12A through 50-12B
.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:948f9d8a3d98eb8e28ccb5cbe418772c294af393098cbdb541d087ecae0b6d95","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40N","para":"55-40N","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R also elects to consider collection activity after the balance sheet date when estimating expected credit losses (that is, it elects to apply the accounting policy election in paragraphs
326-20-30-10E through 30-10H
). Entity R considers subsequent collection activity through May 31, 20X1.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Assume the same facts and circumstances as Case 1, except that Entity R also elects to consider collection activity after the bal…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:17424cc8776137b7927e052b8945266cab6dde456228aad15a584a869284e31d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40O","para":"55-40O","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of its receivables other than the collection activity detailed in paragraph 326-20-55-40P. Entity R has not updated its historical credit loss rates for collection activity after the balance sheet date.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R has not identified other information that is expected to affect the collectibility of its receivables other than the col…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d1e6cbfaf4f1ea3f7a27b8f8230eac2fa0079d669d894a5a6e9903b199254f93","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40P","para":"55-40P","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R’s December 31, 20X0 financial statements are available to be issued on June 15, 20X1. As of May 31, 20X1, Entity R has observed the following collection activity for outstanding receivables as of the balance sheet date (December 31, 20X0). As part of the estimate of expected credit losses, Entity R applies a credit loss rate of 99 percent to the receivables that are uncollected as of the date through which it considers subsequent collection activity (in this Case, May 31, 20X1) because all remaining amounts have been outstanding for more than 120 days.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R’s December 31, 20X0 financial statements are available to be issued on June 15, 20X1. As of May 31, 20X1, Entity R has o…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe36f896ef1123264c6825f68bede40f46694c5e6bd6c86b6f4428ff4f7ed630","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-40Q","para":"55-40Q","html":"
Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:
326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets and the accounting policy election to consider subsequent collection activity, along with the date through which collection activity was considered (in this Case, May 31, 20X1), in accordance with the requirements in paragraphs
326-20-50-12A through 50-12B
.
","snippet":"Transition date:(P) December 16, 2025; (N) December 16, 2025Transition guidance:326-10-65-6Entity R discloses that it has elected the practical expedient to assume that current conditions as of the balance sheet date do …","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d457d17c93b9ed70da5db2d45c666e0864e526d511fe53c602474d1651dc4c70","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-41","para":"55-41","html":"
This Example illustrates one way an entity may implement the guidance in paragraph 326-20-35-5 for estimating expected credit losses on a collateral-dependent financial asset for which the borrower is experiencing financial difficulty based on the entity's assessment.
","snippet":"This Example illustrates one way an entity may implement the guidance in paragraph 326-20-35-5 for estimating expected credit losses on a collateral-dependent financial asset for which the borrower is experiencing financ…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:45085342817e41ab310cfd86f0e8ef36cc6b0702ce75e3a220206cf9c79a9537","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-42","para":"55-42","html":"
Bank F provides commercial real estate loans to developers of luxury apartment buildings. Each loan is secured by a respective luxury apartment building. Over the past two years, comparable standalone luxury housing prices have dropped significantly, while luxury apartment communities have experienced an increase in vacancy rates.
","snippet":"Bank F provides commercial real estate loans to developers of luxury apartment buildings. Each loan is secured by a respective luxury apartment building. Over the past two years, comparable standalone luxury housing pric…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e312bcee2aca3694857affcdeaaa4cb5dc260c57c82b5036c8eb24e28b1f3d5d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-43","para":"55-43","html":"
At the end of 20X7, Bank F reviews its commercial real estate loan to Developer G and observes that Developer G is experiencing financial difficulty as a result of, among other things, decreasing rental rates and increasing vacancy rates in its apartment building.
","snippet":"At the end of 20X7, Bank F reviews its commercial real estate loan to Developer G and observes that Developer G is experiencing financial difficulty as a result of, among other things, decreasing rental rates and increas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:796b28d05de2ee77ed2d81966bbc77b03bc2dfce866557f2a4768b0dc7aecb2e","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-44","para":"55-44","html":"
After analyzing Developer G's financial condition and the operating statements for the apartment building, Bank F believes that it is unlikely Developer G will be able to repay the loan at maturity in 20X9. Therefore, Bank F believes that repayment of the loan is expected to be substantially through the foreclosure and sale (rather than the operation) of the collateral. As a result, in its financial statements for the period ended December 31, 20X7, Bank F utilizes the practical expedient provided in paragraph 326-20-35-5 and uses the apartment building's fair value, less costs to sell, when developing its estimate of expected credit losses.
","snippet":"After analyzing Developer G's financial condition and the operating statements for the apartment building, Bank F believes that it is unlikely Developer G will be able to repay the loan at maturity in 20X9. Therefore, Ba…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b7d36e40e5ba70b97ad1781d8a0549a7ec1010072b3b153a4ac87074f528ac3","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-45","para":"55-45","html":"
This Example illustrates one way an entity may implement the guidance in paragraph 326-20-35-6 for estimating expected credit losses on financial assets with collateral maintenance provisions.
","snippet":"This Example illustrates one way an entity may implement the guidance in paragraph 326-20-35-6 for estimating expected credit losses on financial assets with collateral maintenance provisions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e173de28882ddc3b06dadc4113c7aeeda2128d24d110503cb3e91fdab68dd0ea","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-46","para":"55-46","html":"
Bank H enters into a reverse repurchase agreement with Entity I that is in need of short-term financing. Under the terms of the agreement, Entity I sells securities to Bank H with the expectation that it will repurchase those securities for a certain price on an agreed-upon date. In addition, the agreement contains a provision that requires Entity I to provide security collateral that is valued daily, and the amount of the collateral is adjusted up or down to reflect changes in the fair value of the underlying securities transferred. This collateral maintenance provision is designed to ensure that at any point during the arrangement, the fair value of the collateral continually equals or is greater than the amortized cost basis of the reverse repurchase agreement.
","snippet":"Bank H enters into a reverse repurchase agreement with Entity I that is in need of short-term financing. Under the terms of the agreement, Entity I sells securities to Bank H with the expectation that it will repurchase …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aad3bdd76a5f800958c86be1c0be33002fa5c64faabe0866fc70a3587d4f35c6","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-47","para":"55-47","html":"
At the end of the first reporting period after entering into the agreement with Entity I, Bank H evaluates the reverse repurchase agreement's collateral maintenance provision to determine whether it can use the practical expedient in accordance with paragraph 326-20-35-6 for estimating expected credit losses. Bank H determines that although there is a risk that Entity I may default, Bank H's expectation of nonpayment of the amortized cost basis on the reverse repurchase agreement is zero because Entity I continually adjusts the amount of collateral such that the fair value of the collateral is always equal to or greater than the amortized cost basis of the reverse repurchase agreement. In addition, Bank H continually monitors that Entity I adheres to the collateral maintenance provision. As a result, Bank H uses the practical expedient in paragraph 326-20-35-6 and does not record expected credit losses at the end of the first reporting period because the fair value of the security collateral is greater than the amortized cost basis of the reverse repurchase agreement. Bank H performs a reassessment of the fair value of collateral in relation to the amortized cost basis each reporting period.
","snippet":"At the end of the first reporting period after entering into the agreement with Entity I, Bank H evaluates the reverse repurchase agreement's collateral maintenance provision to determine whether it can use the practical…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b3f79a1e9f0de5f119f45b4aa98c0a6f3799e34deaf68141f42c9425ec86bba","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-48","para":"55-48","html":"
This Example illustrates one way, but not the only way, an entity may estimate expected credit losses when the expectation of nonpayment is zero. This example is not intended to be only applicable to U.S. Treasury securities.
","snippet":"This Example illustrates one way, but not the only way, an entity may estimate expected credit losses when the expectation of nonpayment is zero. This example is not intended to be only applicable to U.S. Treasury securi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e9ad8ee44bebbf0dcadea3e089e32303aa6341c45bc76bade7db856fe538c26b","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-49","para":"55-49","html":"
Entity J invests in U.S. Treasury securities with the intent to hold them to collect contractual cash flows to maturity. As a result, Entity J classifies its U.S. Treasury securities as held to maturity and measures the securities on an amortized cost basis.
","snippet":"Entity J invests in U.S. Treasury securities with the intent to hold them to collect contractual cash flows to maturity. As a result, Entity J classifies its U.S. Treasury securities as held to maturity and measures the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2ab3a69a0b1810cffaf59e4aad42b41c210127e5abb6fd4b0ef065cd0a08fe6","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-50","para":"55-50","html":"
Although U.S. Treasury securities often receive the highest credit rating by rating agencies at the end of the reporting period, Entity J's management still believes that there is a possibility of default, even if that risk is remote. However, Entity J considers the guidance in paragraph 326-20-30-10 and concludes that the long history with no credit losses for U.S. Treasury securities (adjusted for current conditions and reasonable and supportable forecasts) indicates an expectation that nonpayment of the amortized cost basis is zero, even if the U.S. government were to technically default. Judgment is required to determine the nature, depth, and extent of the analysis required to evaluate the effect of current conditions and reasonable and supportable forecasts on the historical credit loss information, including qualitative factors. In this circumstance, Entity J notes that U.S. Treasury securities are explicitly fully guaranteed by a sovereign entity that can print its own currency and that the sovereign entity's currency is routinely held by central banks and other major financial institutions, is used in international commerce, and commonly is viewed as a reserve currency, all of which qualitatively indicate that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Therefore, Entity J does not record expected credit losses for its U.S. Treasury securities at the end of the reporting period. The qualitative factors considered by Entity J in this Example are not an all-inclusive list of conditions that must be met in order to apply the guidance in paragraph 326-20-30-10.
","snippet":"Although U.S. Treasury securities often receive the highest credit rating by rating agencies at the end of the reporting period, Entity J's management still believes that there is a possibility of default, even if that r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3e50d2040301d829f01e10ef46c062b3261167fceb9f27479bf5908ee35e0954","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-51","para":"55-51","html":"
This Example illustrates how an entity may implement the guidance in paragraphs
326-20-35-8 through 35-8A
relating to writeoffs and recoveries of expected credit losses on financial assets.
","snippet":"This Example illustrates how an entity may implement the guidance in paragraphs 326-20-35-8 through 35-8A relating to writeoffs and recoveries of expected credit losses on financial assets.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:154ec58d66c2da2b78f15907e02389e4ec7790703d72b7f26bd720f3102e255e","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-52","para":"55-52","html":"
Bank K currently evaluates its loan to Entity L on an individual basis because Entity L is 90 days past due on its loan payments and the loan no longer exhibits similar risk characteristics with other loans in the portfolio. At the end of December 31, 20X3, the amortized cost basis for Entity L's loan is $500,000 with an allowance for credit losses of $375,000. During the first quarter of 20X4, Entity L issues a press release stating that it is filing for bankruptcy. Bank K determines that the $500,000 loan made to Entity L is uncollectible. Bank K considers all available information that is relevant and reasonably available, without undue cost or effort, and determines that the information does not support an expectation of a future recovery in accordance with paragraph 326-20-30-7. Bank K measures a full credit loss on the loan to Entity L and writes off its entire loan balance in accordance with paragraph 326-20-35-8, as follows:During March 20X6, Bank K receives a partial payment of $50,000 from Entity L for the loan previously written off. Upon receipt of the payment, Bank K recognizes the recovery in accordance with paragraph 326-20-35-8, as follows:
","snippet":"Bank K currently evaluates its loan to Entity L on an individual basis because Entity L is 90 days past due on its loan payments and the loan no longer exhibits similar risk characteristics with other loans in the portfo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d94244f7c3ae2182204c1d78f2a20e6c89a152c73efed8d91c16a58423efca3f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-53","para":"55-53","html":"
For its March 31, 20X6 financial statements, Bank K estimates expected credit losses on its financial assets and determines that the current estimate is consistent with the estimate at the end of the previous reporting period. During the period, Bank K does not record any change to its allowance for credit losses account other than the recovery of the loan to Entity L. To adjust its allowance for credit losses to reflect the current estimate, Bank K reports the following on March 31, 20X6:Alternatively, Bank K could record the recovery of $50,000 directly as a reduction to credit loss expense, rather than initially recording the cash received against the allowance.
","snippet":"For its March 31, 20X6 financial statements, Bank K estimates expected credit losses on its financial assets and determines that the current estimate is consistent with the estimate at the end of the previous reporting p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1e3adf56e37a94588700a7ef8ee468bf1f91041f7ce2395995d71a47ac52b93a","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-54","para":"55-54","html":"
This Example illustrates the application of the guidance in paragraph 326-20-30-11 for off-balance-sheet credit exposures that are unconditionally cancellable by the issuer.
","snippet":"This Example illustrates the application of the guidance in paragraph 326-20-30-11 for off-balance-sheet credit exposures that are unconditionally cancellable by the issuer.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:09526ce79365a09950026fa268755a3a2c11c0019f7f5fb5035de959875454b8","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-55","para":"55-55","html":"
Bank M has a significant credit card portfolio, including funded balances on existing cards and unfunded commitments (available credit) on credit cards. Bank M's card holder agreements stipulate that the available credit may be unconditionally cancelled at any time.
","snippet":"Bank M has a significant credit card portfolio, including funded balances on existing cards and unfunded commitments (available credit) on credit cards. Bank M's card holder agreements stipulate that the available credit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75fe6b3ef0cbfceb0e4bf9aaefdc7f0efd0897a1c53b28dde4a726bc6453d828","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-56","para":"55-56","html":"
When determining the allowance for credit losses, Bank M estimates the expected credit losses over the remaining lives of the funded credit card loans. Bank M does not record an allowance for unfunded commitments on the unfunded credit cards because it has the ability to unconditionally cancel the available lines of credit. Even though Bank M has had a past practice of extending credit on credit cards before it has detected a borrower's default event, it does not have a present contractual obligation to extend credit. Therefore, an allowance for unfunded commitments should not be established because credit risk on commitments that are unconditionally cancellable by the issuer are not considered to be a liability.
","snippet":"When determining the allowance for credit losses, Bank M estimates the expected credit losses over the remaining lives of the funded credit card loans. Bank M does not record an allowance for unfunded commitments on the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77c22c800fb4ae5cc63f8f60ff163b499d9019c22beaced748f92fbad3b7a743","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-57","para":"55-57","html":"
This Example illustrates factors that may be considered when assessing whether the purchased financial assets have more than an insignificant deterioration in credit quality since origination.
","snippet":"This Example illustrates factors that may be considered when assessing whether the purchased financial assets have more than an insignificant deterioration in credit quality since origination.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:750fd16dfb340b6475d3504c7c8b423221445a27028c24810c9ca8d7a74b357f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-58","para":"55-58","html":"
Entity N purchases a portfolio of financial assets subsequently measured at amortized cost basis with varying levels of credit quality. When determining which assets should be considered to be in the scope of the guidance for purchased financial assets with credit deterioration, Entity N considers the factors in paragraph 326-20-55-4 that are relevant for determining collectibility.
","snippet":"Entity N purchases a portfolio of financial assets subsequently measured at amortized cost basis with varying levels of credit quality. When determining which assets should be considered to be in the scope of the guidanc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:509b054282da2bf71bd4fb387b3cde4aef324fab24996fabc3c74ab7ce423b51","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-59","para":"55-59","html":"
Entity N assesses what is more-than-insignificant credit deterioration since origination and considers the purchased assets with the following characteristics to be consistent with the factors that affect collectibility in paragraph 326-20-55-4. Entity N records the allowance for credit losses in accordance with paragraph 326-20-30-13 for the following assets:
  1. a
    Financial assets that are delinquent as of the acquisition date
  2. b
    Financial assets that have been downgraded since origination
  3. c
    Financial assets that have been placed on nonaccrual status
  4. d
    Financial assets for which, after origination, credit spreads have widened beyond the threshold specified in its policy.
","snippet":"Entity N assesses what is more-than-insignificant credit deterioration since origination and considers the purchased assets with the following characteristics to be consistent with the factors that affect collectibility …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f57024a7bbf63ad45541ac54e78265a1c041fbcb399078cdd873d9462645d2a1","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-60","para":"55-60","html":"
Judgment is required when determining whether purchased financial assets should be recorded as purchased financial assets with credit deterioration. Entity N's considerations represent only a few of the possible considerations. There may be other acceptable considerations and policies applied by an entity to identify purchased financial assets with credit deterioration.
","snippet":"Judgment is required when determining whether purchased financial assets should be recorded as purchased financial assets with credit deterioration. Entity N's considerations represent only a few of the possible consider…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f5cbeaab0c9dfa527e0c863122e930e2052f85343e0ec1d0f4aba377dd87baf","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-61","para":"55-61","html":"
This Example illustrates application of the guidance to an individual purchased financial asset with credit deterioration.
","snippet":"This Example illustrates application of the guidance to an individual purchased financial asset with credit deterioration.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7a759badc85016766d0a1e3283008ce7d440ac65b286525ebfa4bc6b1a55072","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-62","para":"55-62","html":"
Under paragraphs 326-20-30-13 and 310-10-35-53B, for purchased financial assets with credit deterioration, the discount embedded in the purchase price that is attributable to expected credit losses should not be recognized as interest income and also should not be reported as a credit loss expense upon acquisition.
","snippet":"Under paragraphs 326-20-30-13 and 310-10-35-53B, for purchased financial assets with credit deterioration, the discount embedded in the purchase price that is attributable to expected credit losses should not be recogniz…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a5bc9cac2d923a0611c188362ba333bc14d948e59ce25e47b4a78b87ef349d2","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-63","para":"55-63","html":"
Bank O records purchased financial assets with credit deterioration in its existing systems by recognizing the amortized cost basis of the asset, at acquisition, as equal to the sum of the purchase price and the associated allowance for credit loss at the date of acquisition. The difference between amortized cost basis and the par amount of the debt is recognized as a noncredit discount or premium. By doing so, the credit-related discount is not accreted to interest income after the acquisition date.
","snippet":"Bank O records purchased financial assets with credit deterioration in its existing systems by recognizing the amortized cost basis of the asset, at acquisition, as equal to the sum of the purchase price and the associat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8b0e4c452ddf93837cc9704c84919a2ff662f05cc5dfc6a6dffe8fdd2535fbb","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-64","para":"55-64","html":"
Assume that Bank O pays $750,000 for a financial asset with a par amount of $1 million. The instrument is measured at amortized cost basis. At the time of purchase, the allowance for credit losses on the unpaid principal balance is estimated to be $175,000. At the purchase date, the statement of financial position would reflect an amortized cost basis for the financial asset of $925,000 (that is, the amount paid plus the allowance for credit loss) and an associated allowance for credit losses of $175,000. The difference between par of $1 million and the amortized cost of $925,000 is a non-credit-related discount. The acquisition-date journal entry is as follows:
","snippet":"Assume that Bank O pays $750,000 for a financial asset with a par amount of $1 million. The instrument is measured at amortized cost basis. At the time of purchase, the allowance for credit losses on the unpaid principal…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:def8ad18986ff4ab6a46d7cd94783c76478cbd5b433d2cda6472fec784eb8333","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-65","para":"55-65","html":"
Subsequently, the $75,000 noncredit discount would be accreted into interest income over the life of the financial asset consistent with other Topics. The $175,000 allowance for credit losses should be updated in subsequent periods consistent with the guidance in Section 326-20-35, with changes in the allowance for credit losses on the unpaid principal balance reported immediately in the statement of financial performance as a credit loss expense.
","snippet":"Subsequently, the $75,000 noncredit discount would be accreted into interest income over the life of the financial asset consistent with other Topics. The $175,000 allowance for credit losses should be updated in subsequ…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01d5ab4a359a26f002603fb6cf66153c6f557bd74d46d60dc550107cb2834931","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-66","para":"55-66","html":"
This Example illustrates the application of the guidance to determine the expected credit loss using a loss rate for an individual purchased financial asset with credit deterioration. The method applied to initially measure expected credit losses for purchased financial assets with credit deterioration generally would be applied consistently over time and should faithfully estimate expected credit losses for financial assets by applying this Subtopic. This does not mean that the application of a loss-rate approach is an irrevocable election.
","snippet":"This Example illustrates the application of the guidance to determine the expected credit loss using a loss rate for an individual purchased financial asset with credit deterioration. The method applied to initially meas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0090c96e6a04cd989bc651198516760b373f6ad51bc45e64edadac9b8ac251cc","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-67","para":"55-67","html":"
Bank P purchases a $5 million amortizing nonprepayable loan with a 6 percent coupon rate and original contract term of 5 years. All contractual principal and interest payments due of $1,186,982 for each of the first 3 years of the loan's life have been received, and the loan has an unpaid balance of $2,176,204 at the purchase date at the beginning of Year 4 of the loan's life. The original contractual amortization schedule of the loan is as follows.
","snippet":"Bank P purchases a $5 million amortizing nonprepayable loan with a 6 percent coupon rate and original contract term of 5 years. All contractual principal and interest payments due of $1,186,982 for each of the first 3 ye…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e63ed60b6da5d2d518c94645c1fe726aea52fc6001c2c9441ae64144468c8656","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-68","para":"55-68","html":"
At the purchase date, the loan is purchased for $1,918,559 because significant credit events have been discovered. The purchaser expects a 10 percent loss rate, based on historical loss information over the contractual term of the loan, adjusted for current conditions and reasonable and supportable forecasts, for groups of similar loans. In accordance with paragraph 326-20-30-14, as a result of the expected credit losses, the allowance is estimated as $217,620 by multiplying the 10 percent loss rate by the unpaid principal balance, or par amount, of the loan (see beginning balance in Year 4 in the table above). The following journal entry is recorded at the acquisition of the loan:
","snippet":"At the purchase date, the loan is purchased for $1,918,559 because significant credit events have been discovered. The purchaser expects a 10 percent loss rate, based on historical loss information over the contractual t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:31647f1d58cf1e9ff499d15bf6bae9fbf0575b43f3d14b7dc8ba848c8d44343f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-69","para":"55-69","html":"
The contractual interest rate is adjusted for the noncredit discount of $40,025 to determine the discount rate (consistent with paragraph 326-20-30-14) of 7.33 percent, which excludes the purchaser's assessment of expected credit losses at the acquisition date. The 7.33 percent (rounded from 7.3344 percent) is computed as the rate that equates the amortized cost of $2,136,179 (computed by adding the purchase price of $1,918,559 to the gross-up adjustment of $217,620) with the net present value of the remaining contractual cash flows on the purchased asset ($1,186,982 in each of Years 4 and 5).
","snippet":"The contractual interest rate is adjusted for the noncredit discount of $40,025 to determine the discount rate (consistent with paragraph 326-20-30-14) of 7.33 percent, which excludes the purchaser's assessment of expect…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0158b3c00b2dd153d9298f5625c2b7eaf39655cc6826a7652cf0c0f93236f8e9","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-70","para":"55-70","html":"
A default occurs in the last year of the loan's life. The amortization of the purchased loan would be recorded as follows for the periods after the purchase date in Years 4 and 5 of the loan's life.
","snippet":"A default occurs in the last year of the loan's life. The amortization of the purchased loan would be recorded as follows for the periods after the purchase date in Years 4 and 5 of the loan's life.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2625a5496c0a09eaa3a3d0293da3dcc0824c9789710a4ade8717caed9cd2b8fc","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-71","para":"55-71","html":"
The rollforward of the allowance would be as follows.
","snippet":"The rollforward of the allowance would be as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6d361c3c7c86c3e5bda34df32f8b1cf5868aeaa3721ceda1965839755c9f9f0","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-72","para":"55-72","html":"
This Example illustrates the application of the guidance to determine the expected credit loss using a discounted cash flow approach for an individual purchased financial asset with credit deterioration. The method applied to initially measure expected credit losses for purchased financial assets with credit deterioration generally would be applied consistently over time and should faithfully estimate expected credit losses for financial assets by applying this Subtopic. This does not mean that the application of a discounted cash flow approach is an irrevocable election.
","snippet":"This Example illustrates the application of the guidance to determine the expected credit loss using a discounted cash flow approach for an individual purchased financial asset with credit deterioration. The method appli…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:716488e23901d1d5ddeb73c94d57c74721e81b7846e7252163add6b921fb0a9e","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-73","para":"55-73","html":"
This Example uses the same assumptions as in Example 13, as described in paragraphs
326-20-55-66 through 55-71
.
","snippet":"This Example uses the same assumptions as in Example 13, as described in paragraphs 326-20-55-66 through 55-71.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5443beb90b0429fba712076beaa0743071a32d9be7b022bf5233b5f4cf573ff2","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-74","para":"55-74","html":"
To determine the discount rate in accordance with paragraph 326-20-30-14, the expected cash flows would be estimated and discounted at a rate that equates the purchase price with the present value of expected cash flows. The expected cash flows, including the considerations for current conditions and reasonable and supportable forecasts, are expected to be $1,186,982 in Year 4 and $969,362 in Year 5. The discount rate that equates the purchase price with the cash flows expected to be collected is 8.46 percent (rounded from 8.455 percent). This also is the same rate that equates the amortized cost basis (purchase price plus the acquisition date allowance for credit losses) with the net present value of the future contractual cash flows.
","snippet":"To determine the discount rate in accordance with paragraph 326-20-30-14, the expected cash flows would be estimated and discounted at a rate that equates the purchase price with the present value of expected cash flows.…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:755ccb4ecdf7ab473e530f938306d68d5051c315e9e5ebd9637e8b5f034f1d49","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-75","para":"55-75","html":"
To determine the allowance for credit losses at the purchase date, the expected credit loss (that is, the contractual cash that an entity does not expect to collect) is discounted using the discount rate of 8.46 percent. The expected credit loss is $217,620 in Year 5, as determined by finding the difference between the contractual cash flows of $1,186,982 and the expected cash flows of $969,362. The present value of the expected loss at the purchase date is $185,012. The journal entry to record the purchase of this loan is as follows:
","snippet":"To determine the allowance for credit losses at the purchase date, the expected credit loss (that is, the contractual cash that an entity does not expect to collect) is discounted using the discount rate of 8.46 percent.…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5122f68c5691a0d78acb30fcdc7e848ba2b12c4389a28b04739f1af45ebea505","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-76","para":"55-76","html":"
The amortization of the loan in the years following the purchase date is as follows.
","snippet":"The amortization of the loan in the years following the purchase date is as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cab1198a7a4b48e9a331001772670f68917505608a9575da48c506862a003c26","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-77","para":"55-77","html":"
The Day 1 allowance established at the purchase date was $185,012. The allowance for credit losses was estimated on a discounted cash flow approach and, therefore, the allowance for credit losses needs to be adjusted for the time value of money. The rollforward of the allowance for credit losses is shown below.
","snippet":"The Day 1 allowance established at the purchase date was $185,012. The allowance for credit losses was estimated on a discounted cash flow approach and, therefore, the allowance for credit losses needs to be adjusted for…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e17f55e10885b73fa9ae9a2651a4d5a3e4464c825b1aff1eca907a6d817fd13","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-78","para":"55-78","html":"
The net income effect of a loss-rate approach illustrated in Example 13 and of a discounted cash flow approach illustrated in this Example is the same ($237,785 net income). The difference between the two approaches is that the Day 1 allowance for credit losses under a discounted cash flow approach explicitly reflects the time value of money. Therefore, it needs to be accreted to the future value of the loss that ultimately will occur. The change in the allowance for credit losses associated with the time value of money can be presented either as credit loss expense or as an adjustment to interest income in accordance with paragraph 326-20-45-3. Therefore, the discounted cash flow approach, over the life of the asset, presents interest income as $270,393 but will require $32,608 ($15,643 in Year 4 plus $16,965 in Year 5) of credit loss expense to be recorded for the time value of money, resulting in net interest income after credit loss expense of $237,785. Under a loss-rate approach as illustrated in Example 13, interest income over the life of the asset is $237,785 but does not require credit loss expense to be recognized.
","snippet":"The net income effect of a loss-rate approach illustrated in Example 13 and of a discounted cash flow approach illustrated in this Example is the same ($237,785 net income). The difference between the two approaches is t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ec69a49c5a030ed099cb3745d88739192f4632ab65ec9d77369d73e1d95c52f","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-79","para":"55-79","html":"
The following Example illustrates the presentation of credit quality disclosures for a financial institution with a narrow range of loan products offered to local customers—both consumer and commercial. Depending on the size and complexity of an entity's portfolio of financing receivables, the entity may present disclosures that are more or less detailed than the following Example. An entity may choose other methods of determining the class of financing receivable and may determine different credit quality indicators that reflect how credit risk is monitored. Some entities may have more than one credit quality indicator for certain classes of financing receivables.
","snippet":"The following Example illustrates the presentation of credit quality disclosures for a financial institution with a narrow range of loan products offered to local customers—both consumer and commercial. Depending on the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f7ee96774e7e7d90dda408e6b2ff88a153b355535436a06d5b92dd6e567b68a2","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-80","para":"55-80","html":"
The following table illustrates certain of the disclosures in paragraph 326-20-50-14 by class of financing receivable.
","snippet":"The following table illustrates certain of the disclosures in paragraph 326-20-50-14 by class of financing receivable.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b6dbcd56f1e5858921d165579b9aa10305ddf096beabeef55081e8cf2c37d4d","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-81","para":"55-81","html":"
Reinsurance recoverables may comprise a variety of risks that affect collectibility including:
  1. a
    Credit risk of the reinsurer/assuming company
  2. b
    Contractual coverage disputes between the reinsurer/assuming company and the insurer/ceding company including contract administration issues
  3. c
    Other noncontractual, noncoverage issues including reinsurance billing and allocation issues.
","snippet":"Reinsurance recoverables may comprise a variety of risks that affect collectibility including:\n(a) Credit risk of the reinsurer/assuming company\n(b) Contractual coverage disputes between the reinsurer/assuming company an…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e965defc3f5fbffba35ff94d655209335b3b1da0b6200e486ed7fee672b89811","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-82","para":"55-82","html":"
This Subtopic only requires measurement of expected losses related to the credit risk of the reinsurer/assuming company.
","snippet":"This Subtopic only requires measurement of expected losses related to the credit risk of the reinsurer/assuming company.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:572f9077dca44f963aa92a931cdac9242c7aba629b0d91b528a7f930307e2425","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-83","para":"55-83","html":"
In situations in which similar risk characteristics are not present in the reinsurance recoverables, the ceding insurer should measure expected credit losses on an individual basis. Similar risk characteristics may not exist because any one or a combination of the following factors exists, including, but not limited to:
  1. a
    Customized reinsurance agreements associated with individual risk geographies
  2. b
    Different size and financial conditions of reinsurers that may be either domestic or international
  3. c
    Different attachment points among reinsurance agreements
  4. d
    Different collateral terms of the reinsurance agreements (such as collateral trusts or letters of credit)
  5. e
    The existence of state-sponsored reinsurance programs.
","snippet":"In situations in which similar risk characteristics are not present in the reinsurance recoverables, the ceding insurer should measure expected credit losses on an individual basis. Similar risk characteristics may not e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1f995a131225c49fde914079c6d1a5086cefa901bc0fc6955ddc0bf6b5bc2a19","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-84","para":"55-84","html":"
However, similar risk characteristics may exist for certain reinsurance recoverables because any one or combination of the following exists:
  1. a
    Reinsurance agreements that have standardized terms
  2. b
    Reinsurance agreements that involve similar insured risks and underwriting practices
  3. c
    Reinsurance counterparties that have similar financial characteristics and face similar economic conditions.
","snippet":"However, similar risk characteristics may exist for certain reinsurance recoverables because any one or combination of the following exists:\n(a) Reinsurance agreements that have standardized terms\n(b) Reinsurance agreeme…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:70893cf0b3e8afb3b462ed44ccd67c474418261065fc32b8920df7c5db661532","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-85","para":"55-85","html":"
Judgment should be applied by ceding insurers in determining if and when similar risks exist within their reinsurance recoverables.
","snippet":"Judgment should be applied by ceding insurers in determining if and when similar risks exist within their reinsurance recoverables.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c9d20176fd7f323c2aab1f57998cb8e6833b0d89aa8cd0947fa7b472d31ff0b9","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-86","para":"55-86","html":"
The following Example illustrates the application of the guidance in paragraph 326-20-30-13A for purchased financial assets with credit deterioration. For purposes of this Example, the acquired portfolio of loans is assumed to share similar risk characteristics and is evaluated for credit losses on a collective basis.
","snippet":"The following Example illustrates the application of the guidance in paragraph 326-20-30-13A for purchased financial assets with credit deterioration. For purposes of this Example, the acquired portfolio of loans is assu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:956a39239a341c1aebdc91832a8d8b8ce1e31bcdf8c1bf404a37a1148c3265ff","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-87","para":"55-87","html":"
Bank Q purchases a portfolio of loans with a par amount of $10 million for $2 million. At acquisition, Bank Q expects to collect $2.5 million on the loan portfolio. Bank Q estimates expected credit losses using a method other than a discounted cash flow method in accordance with paragraph 326-20-30-4. The acquisition-date journal entry is as follows.
","snippet":"Bank Q purchases a portfolio of loans with a par amount of $10 million for $2 million. At acquisition, Bank Q expects to collect $2.5 million on the loan portfolio. Bank Q estimates expected credit losses using a method …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d594c962829351dfd921083f976d385c58439af9f9803808a563bcc9e2a1dd2","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-88","para":"55-88","html":"
After acquisition, Bank Q determines that each loan is deemed uncollectible on an individual unit-of-account basis and, therefore, writes off the loan portfolio. The following journal entries are recorded.
","snippet":"After acquisition, Bank Q determines that each loan is deemed uncollectible on an individual unit-of-account basis and, therefore, writes off the loan portfolio. The following journal entries are recorded.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d1e3e49e5fd424a823ce74b76be73c0611543d0fb3aa4a6c459481335638b981","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-89","para":"55-89","html":"
Although deemed uncollectible on an individual basis, when grouped together, the group of loans is expected to have some recoveries on an aggregate basis. Therefore, Bank Q records a negative allowance in accordance with paragraph 326-20-30-13A. Because Bank Q's expectation of credit conditions has not changed since acquisition, the expected recoveries of $2.5 million must not result in the acceleration of the noncredit discount that existed immediately before being written off. Therefore, the following journal entry is recorded.
","snippet":"Although deemed uncollectible on an individual basis, when grouped together, the group of loans is expected to have some recoveries on an aggregate basis. Therefore, Bank Q records a negative allowance in accordance with…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a48bcd2d88d1d4c9187e4c5e5256517866bda81340cf8c48de192da3ad536a4","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},{"citation":"326-20-55-90","para":"55-90","html":"
Assume the same facts from Example 18. Bank Q subsequently determines that a change in credit conditions has occurred and expects to collect an additional $600,000 (for a total of $3.1 million) on the group of loans. Because Bank Q's expectation of credit conditions has changed and it is determining the amount that it expects to collect using a method other than a discounted cash flow method, the expected recoveries of $3.1 million would be reduced by the noncredit discount of $0.5 million (that has not been accreted). This would result in Bank Q having an overall negative allowance of $2.6 million. Therefore, the following journal entry is recorded.
","snippet":"Assume the same facts from Example 18. Bank Q subsequently determines that a change in credit conditions has occurred and expects to collect an additional $600,000 (for a total of $3.1 million) on the group of loans. Bec…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb0cb1c6ff8c195d780d42cf65dedb715ece4b99469312fa974152fb1a191a1a","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a9abddc378938426002e86868d21d1e9ed85d3e94be3b65b08ccd2c40113776","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89d4883999115c264a8c3bdb31125e2548b973083dad3a1845bad179df269494","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89d4883999115c264a8c3bdb31125e2548b973083dad3a1845bad179df269494","downloaded_from":"2026-09-09T23:49:41.451Z","last_downloaded_at":"2026-09-09T23:49:41.451Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479294","source_sha256":"7f8cc972b094a53696aaaf9ea24b18da85d2512ed9e7ecdf8fa77f37ec9688e4"}}