Loans and investments

Accounting guide , PwC US

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Our comprehensive guide to accounting for loans, receivables, and investments.

This guide was issued in October 2016. Certain sections were updated in May 2017.

Download the guide Loans and investments

In 2016, the FASB issued two standards that address the accounting for financial instruments. ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which is effective beginning in 2018 and ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which is effective beginning in 2020.

This guide assumes that ASU 2016-01 and ASU 2016-13 are effective and have been adopted. Although some significant aspects of the accounting for loans and investments have changed as a result of ASU 2016-01 and ASU 2016-13 (for example, the accounting for equity securities and the accounting for impairments of loans and securities), much of the accounting for these instruments remains the same.

Our Loans and investments guide discusses:

  • Accounting for debt and equity investments including the impairment of equity securities without a readily determinable fair value

  • Accounting for investments in insurance contracts

  • Common types of loans, classifying loans, and accounting for loans and associated loan fees and costs

  • Recognizing interest income on loans and investments

  • The current expected credit loss (CECL) model and its application to loans, HTM debt securities, and other instruments

  • Accounting for loans and investments purchased with credit deterioration (PCD) including the application of the CECL impairment model to PCD instruments

  • Analyzing a debt restructuring by a lender including the accounting treatment of troubled debt restructurings and other loan restructurings

  • Financial statement presentation and disclosure of loans and investments

  • Effective dates and transition provisions of ASU 2016-01 and ASU 2016-13

May 2017 update to the Loans and investments guide

Chapter 4, Accounting for loans, has been updated to clarify the guidance regarding transfers of loans between held for investment and held for sale.

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