Contrasting the new US GAAP and IFRS credit impairment models
In depth , PwC US Sep 26, 2017
What are the differences between the US GAAP and IFRS credit impairment models? Find out here in our comparison of the requirements of ASC 326 and IFRS 9.
Overview
Although the new credit impairment accounting guidance under US GAAP and IFRS both shift from an “incurred” loss model to an “expected” loss model, the standards are not converged. Under US GAAP, lifetime expected credit loss on financial instruments is recognized at inception. Under IFRS, only a portion of the lifetime expected credit loss is initially recognized. Subsequently, if there is a significant increase in credit risk, the entire lifetime credit loss is recognized.
There are many additional differences between the two standards, and others will likely be identified as companies continue with implementation efforts and develop modelling approaches, and as regulators respond to stakeholder inquiries.
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