In June 2016, the FASB issued ASU 2016-13,1 which 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.
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.” ASC 326 represents a new ASC Topic that includes both legacy impairment guidance moved from other ASC paragraphs as well as new credit losses guidance introduced by ASU 2016-13. Some of the guidance moved from other ASC paragraphs was also amended by ASU 2016-13.