Read our updated Loans and investments accounting guide
Codification improvements amend recognition and measurement guidance
Public companies have adopted the FASB's recognition and measurement guidance and private companies are adopting throughout 2018. All are evaluating the FASB's credit losses guidance to be ready for the effective date of January 1, 2020. Explore PwC's latest thinking on not just these projects, but all financial instruments.
- For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use the new current expected credit loss (CECL) approach that will generally result in earlier recognition of allowances for losses.
- For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities.
- Q1 2020 for calendar year-end public business entities that are SEC filers
- Q1 2021 for calendar year-end public business entities that are not SEC filers
- 2021 for calendar year-end nonpublic entities
Early application of the guidance is permitted in 2019 for calendar year-end entities.
You’ve checked the new revenue and leases standards off your list. Next up: the current expected credit loss (CECL) standard. If you’ve only just begun or haven’t yet started to think about what CECL means for your company―then, tune in! PwC partner Seth Drucker joins Heather Horn to discuss the CECL model and what it means for companies as they prepare for adoption.
Financial services companies will be broadly impacted by the FASB’s new CECL impairment model for financial assets. Further, nonfinancial services companies also hold financial assets that will be subject to the new model. In this video we cover how the new CECL model would be applied to (1) trade receivables, (2) lease receivables, (3) other financial instruments, as well as (4) updates to the impairment guidance for available-for-sale securities.