Industry Insights

New Credit Impairment Standard Issued

June 2016
Author:  Anne Coughlan

Anne Coughlan

Director

Audit

201 N. Illinois Street, Suite 700
P.O. Box 44998
Indianapolis, IN 46244-0998 (46204)

Indianapolis
317.383.4000

Executive Summary

The Financial Accounting Standards Board has released the long-awaited standard updating the guidance on recognition and measurement of credit losses for financial assets. Accounting Standards Update 2016-13, Financial Instruments–Credit Losses (Topic 326)–Measurement of Credit Losses on Financial Instruments, supersedes today’s guidance and applies to all entities holding financial assets not measured at fair value through net income. The new requirements, known as the current expected credit loss model, replace today’s incurred loss model. Here’s what you need to know.


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