New FASB ASU 2016-13 Accounting for Credit Losses: Preparing for Massive Changes

Current Expected Credit Loss Model, Transition Challenges, Cumulative Effect Adjustments, Required Disclosures

A live 110-minute CPE webinar with interactive Q&A


Thursday, July 18, 2019

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, June 21, 2019

or call 1-800-926-7926

This webinar will provide auditors and financial statement preparers with a practical guide to the latest developments on FASB's new Accounting Standards Update, ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The panelists will discuss the initial measurement requirements and subsequent guidance, including FASB's most recent proposal to permit companies to elect the fair value valuation option on an instrument-by-instrument basis for certain financial assets.

Description

The FASB issued ASU 2106-13, in June 2016. The standard represents a dramatic change to how GAAP-reporting companies must account for credit losses for most financial assets. While the new standard will have its most significant impact on banks and other financial institutions,the new rules will apply across all industries.

ASU 2016-13 replaces the incurred loss measurement standard with a new current expected credit loss (CECL) model. Under ASU 2016-13, a company must recognize full lifetime expected losses on each financial asset "to present the net carrying value at the amount expected to be collected" on the asset at the time the asset is recognized. The rule requires companies to collect historical credit loss data for various financial assets sharing similar risk characteristics and use this information along with current conditions and "reasonable and supportable forecasts."

The FASB also recently issued transition relief for entities adopting ASU 2016-13. Financial Instruments—Credit Losses (Topic 326) Targeted Transition Relief (ASU 2019-05) which allows companies to elect the fair value option on newly originated or newly purchased financial assets where the company had previously recorded similar holdings at amortized cost.

With the deadlines for adoption of ASU 2016-13 and ASU 2019-05 rapidly approaching (2020 calendar year for SEC filer public companies, and 2021 calendar year for non-public entities), implementation of the new standard is already presenting significant challenges to financial statement preparers.

Listen as our expert panel provides practical guidance to meeting the implementation challenges of FASB's new credit loss measurement standard.

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Outline

  1. Existing loss model and FASB rationale for issuing the new standard
  2. ASU 2016-13 and creation of CECL measurement standard
  3. Suggested forecasting models for measuring CECLs
  4. Implementation challenges and adoption deadlines
    1. Data collection challenges
    2. Cumulative effect adjustment charge to the income statement
    3. Additional disclosures arising from implementation method chosen
  5. FASB transition relief under ASU 2019-05

Benefits

The panel will address these and other relevant topics:

  • What methods does ASU 2016-13 suggest for forecasting CECLs?
  • Income statement reporting of CECL recognition for existing financial assets
  • Methods of collecting and maintaining historical credit loss information on an aggregate basis for assets with similar risk characteristics
  • FASB transition relief under ASU 2019-05

Faculty

Victor, George
George I. Victor, CPA, CGMA

Shareholder
Giambalvo Stalzer & Company

Mr. Victor has extensive experience in providing accounting and advisory services to both privately held and SEC...  |  Read More

Additional faculty
to be announced.

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