7.1 Introduction

The CECL model does not apply to AFS debt securities. The FASB discusses its basis for a distinct model in paragraph BC81 of ASU 2016-13, which states that “the same credit loss model cannot apply because there are different measurement attributes. The measurement attribute for available-for-sale debt securities necessitates a separate credit loss model because an entity may realize the total value of the securities either through collection of contractual cash flows or through sales of the securities.”