{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/326/30/#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":"326-30","subtopic_title":"Available-for-Sale Debt Securities","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":"326-30-55-1","para":"55-1","html":"
There are numerous factors to be considered in determining whether a credit loss exists. The length of time a security has been in an unrealized loss position should not be a factor, by itself or in combination with others, that an entity would use to conclude that a credit loss does not exist. The following list is not meant to be all inclusive. All of the following factors should be considered:
  1. a
    The extent to which the fair value is less than the amortized cost basis
  2. b
    Adverse conditions specifically related to the security, an industry, or geographic area; for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. Examples of those changes include any of the following:
    1. 1
      Changes in technology
    2. 2
      The discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security
    3. 3
      Changes in the quality of the credit enhancement.
  3. c
    The payment structure of the debt security (for example, nontraditional loan terms as described in paragraphs
    825-10-55-1 through 55-2
    ) and the likelihood of the issuer being able to make payments that increase in the future
  4. d
    Failure of the issuer of the security to make scheduled interest or principal payments
  5. e
    Any changes to the rating of the security by a rating agency.
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An entity should consider available information relevant to the collectibility of the security, including information about past events, current conditions, and reasonable and supportable forecasts, when developing the estimate of cash flows expected to be collected. That information should include all of the following:
  1. a
    The remaining payment terms of the security
  2. b
    Prepayment speeds
  3. c
    The financial condition of the issuer(s)
  4. d
    Expected defaults
  5. e
    The value of any underlying collateral.
","snippet":"An entity should consider available information relevant to the collectibility of the security, including information about past events, current conditions, and reasonable and supportable forecasts, when developing the e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e2859b3217c8f3f425d9243b7f922400acae467593069329fbd2143cfe020194","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-3","para":"55-3","html":"
To achieve the objective in paragraph 326-30-55-2, the entity should consider, for example, all of the following to the extent they influence the estimate of expected cash flows on a security:
  1. a
    Industry analyst reports and forecasts
  2. b
    Credit ratings
  3. c
    Other market data that are relevant to the collectibility of the security.
","snippet":"To achieve the objective in paragraph 326-30-55-2, the entity should consider, for example, all of the following to the extent they influence the estimate of expected cash flows on a security:\n(a) Industry analyst report…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93b66bd5043f26c97fbcbb8aa7ca223394b07e1ad5a57963cc54685adabae59c","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-4","para":"55-4","html":"
An entity also should consider how other credit enhancements affect the expected performance of the security, including consideration of the current financial condition of the guarantor of a security (if the guarantee is not a separate contract as discussed in paragraph 326-30-35-5), the willingness of the guarantor to pay, and/or whether any subordinated interests are capable of absorbing estimated losses on the loans underlying the security. The remaining payment terms of the security could be significantly different from the payment terms in prior periods (such as for some securities backed by nontraditional loans; see paragraph 825-10-55-1). Thus, an entity should consider whether a security backed by currently performing loans will continue to perform when required payments increase in the future (including balloon payments). An entity also should consider how the value of any collateral would affect the expected performance of the security. If the fair value of the collateral has declined, an entity should assess the effect of that decline on its ability to collect the balloon payment.
","snippet":"An entity also should consider how other credit enhancements affect the expected performance of the security, including consideration of the current financial condition of the guarantor of a security (if the guarantee is…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a84199edf0a2218c55819a602c1ee4735c7c612f9324413c3b537b67fe56393","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a6588741b208aab99dbaadad27b4fbc0b4c6659019b56a5d3a9ca92086915a8","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"326-30-55-5","para":"55-5","html":"
This Example illustrates one way an entity may identify purchased financial assets with credit deterioration.
","snippet":"This Example illustrates one way an entity may identify purchased financial assets with credit deterioration.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a3812e6dc14b9f57f71a00f8e189b1ed3e0f6420b8e6f4a0b4a41db4e10d157e","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-6","para":"55-6","html":"
Entity A purchases a portfolio of debt securities with varying levels of credit quality that it classifies as available for sale. When determining which individual available-for-sale debt securities should be considered to be in the scope of the guidance for purchased financial assets with credit deterioration, Entity A considers the indicators of impairment in paragraph 326-30-55-1. Entity A also considers its practices for identifying credit losses on available-for-sale debt securities. If Entity A determines that, on an individual basis, the purchased debt securities are purchased financial assets with credit deterioration, it should classify them as such.
","snippet":"Entity A purchases a portfolio of debt securities with varying levels of credit quality that it classifies as available for sale. When determining which individual available-for-sale debt securities should be considered …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a0454041c78f46b74217a0ed3c137742233a935a941e14d53092eaca9fe33b32","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-7","para":"55-7","html":"
Entity A also considers the securities that are within the scope of Subtopic 325-40 on beneficial interests in securitized financial assets. Entity A purchases a residual tranche and determines that there is a significant difference between contractual cash flows and expected cash flows. In accordance with paragraph 325-40-30-1A(a), Entity A applies the accounting for purchased financial assets with credit deterioration to the residual tranche.
","snippet":"Entity A also considers the securities that are within the scope of Subtopic 325-40 on beneficial interests in securitized financial assets. Entity A purchases a residual tranche and determines that there is a significan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3019735dbedbb37dfebf3b49dc8a5920726fdeb3ccbd293d04dfa98dbe686fd4","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-8","para":"55-8","html":"
326-30-50The table shows the gross unrealized losses and fair value of Entity B's investments with unrealized losses that are not deemed to have credit losses (in millions), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 20X3. This Example illustrates the application of paragraphs
326-30-50-4 through 50-6
and, in doing so, describes Entity B's rationale for not reporting all or a portion of unrealized losses presented in the table as credit losses. In the application of paragraph 326-30-50-4(b), Entity B should provide meaningful disclosure about individually significant unrealized losses. To facilitate the narrative disclosures and for simplicity, this Example presents only the quantitative information as of the date of the latest statement of financial position. However, in accordance with paragraphs
326-30-50-4 through 50-6
, that information is required as of each date for which a statement of financial position is presented.
","snippet":"326-30-50The table shows the gross unrealized losses and fair value of Entity B's investments with unrealized losses that are not deemed to have credit losses (in millions), aggregated by investment category and length o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe32fa7587947b068f91481b4ee17255e0b2b3ccf70645134fda959742a94ac3","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},{"citation":"326-30-55-9","para":"55-9","html":"
","snippet":"U.S. Treasury obligations. The unrealized losses on Entity B's investments in U.S. Treasury obligations and direct obligations of U.S. government agencies were caused by interest rate increases. The contractual terms of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7deed2111b3065d68e82d3f84cbf392dbf4c0696a80eb6a2843451b36724588a","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:375790c4cadfa340b0eb5471ff0310c30e1fc02444e405937d90279e5babff38","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d9102574f1bc6eebf34315339e0d8210b1e5b521209ae556d391d3dab126d30","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d9102574f1bc6eebf34315339e0d8210b1e5b521209ae556d391d3dab126d30","downloaded_from":"2026-09-09T23:50:24.829Z","last_downloaded_at":"2026-09-09T23:50:24.829Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479081","source_sha256":"7f1f803a74296bfb53736422ea57807b10a8e785f9d9552c2093cd79c215fbe1"}}