In June 2016, the FASB issued ASU 2016-13, 1which adds to U.S. GAAP an impairment model — known as the current expected credit losses (CECL) model — that is based on expected losses rather than incurred losses. Once effective, the new guidance will significantly change the accounting for credit impairment under ASC 326.2 See Deloitte’s June 17, 2016, Heads Up for more information about the new guidance.
FASB Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments.
FASB Accounting Standards Codification (ASC) Topic 326, Financial Instruments — Credit Losses. ASC 326 represents a new section in the Codification that includes both legacy impairment guidance moved from other Codification sections as well as new credit losses guidance introduced by ASU 2016-13. Some of the guidance moved from other Codification sections was also amended by ASU 2016-13.