Capital Markets Accounting Developments Advisory 2010-8
December 2010
At a glance
In response to the global economic downturn and the perceived need for increased transparency, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2010-20 (the “ASU”), Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, on July 21, 2010.
December 13, 2010
Analysis of ASU 2010-20 – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses
In response to the global economic downturn and the perceived need for increased transparency, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2010-20 (the “ASU”), Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, on July 21, 2010.
The ASU amends current guidance to allow financial statement users to better assess an entity’s exposure to credit risk of financing receivables and the adequacy of an entity’s allowance for credit losses. The amendments in the ASU apply to both public and private entities. The impact of the ASU will depend heavily on the significance of financing receivables to an entity’s operations.
For public companies, the disclosures as of the balance sheet date are effective for fiscal years and interim periods ending after December 15, 2010. The disclosures for reporting period activity (i.e., allowance roll-forward and modification disclosures) are effective for interim and annual periods beginning after December 15, 2010.
The ASU encourages but does not require comparative disclosures at initial adoption. Comparative disclosures are required for the reporting periods that begin after the initial adoption.
For nonpublic entities, all disclosures are effective for periods ending after December 15, 2011.