FASB issued an Accounting Standards Update that makes narrow-scope improvements to various aspects of the financial instruments guidance, including the current expected credit losses (CECL) standard. This update is part of the ongoing codification improvement project that is aimed at clarifying specific areas of accounting guidance to help avoid unintended application. The items addressed in this project are generally not expected to have a significant effect on current accounting practice or create a significant administrative cost for most entities.
The update, among other changes, clarifies the following:
- All nonpublic companies and organizations are required to provide certain fair value option disclosures.
- Disclosure requirements in Topic 320 apply to the disclosure requirements in Topic 942 for depository and lending institutions.
- Contractual term of a net investment in a lease determined in accordance with Topic 842 should be the contractual term used to measure expected credit losses under Topic 326.
- When an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with Topic 326.
Keywords: Americas, US, Accounting, Banking, CECL, IFRS 9, Disclosure, Topic 320, Topic 326, Topic 842, Credit Losses Standard, Financial Instruments, FASB
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