FASB Proposes Guidance Related to Purchased Financial Assets

The FASB has issued a proposed Accounting Standards Update (ASU), Financial Instruments — Credit Losses (Topic 326): Purchased Financial Assets. The FASB is issuing the proposed ASU in response to feedback received as part of its postimplementation review of its credit losses standard, ASU 2016-13.

The proposal would address stakeholders’ concerns that “having two accounting models for purchased financial assets is unnecessarily complex” by requiring that “all acquired financial assets, with certain limited exceptions,” be accounted for under the purchased credit-deteriorated model, also referred to as the “gross-up approach.”

Comments on the proposed ASU are due by August 28, 2023. For more information, see the press release on the FASB’s Web site.