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FASB Approves CECL Changes

On March 31, 2022 FASB issued an ASU with the intentions of improving the decision usefulness of information provided to key stakeholders about certain loan refinancing’s, restructurings, and write-offs.

1. Troubled Debt Restructurings

Recognition and Measurement of TDRs has been eliminated, while enhancing the disclosure requirements for certain loan refinancing’s and restructurings. For entities that have adopted CECL, the amendment is effective for fiscal years beginning after December 15, 2022. For all others, the amendment has the same effective date as CECL adoption. For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption is permitted.

2. Vintage Disclosures

Current-period gross writeoffs by year of origination are now required in the vintage disclosure. For entities that have adopted CECL, the amendment is effective for fiscal years beginning after December 15, 2022. For all others, the amendment has the same effective date as CECL adoption. Early adoption is permitted.

For more information, contact our team of over 65% CPAs, CFAs, PhDs, and former auditors.

You can also read the FASB meeting minutes here.

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As part of an annual study that began in 2020, Valuant conducts analysis on ASC 326, commonly referred to as “CECL”. The study contains key data statistics and insights around the US Regional and Community Banking sectors and the impact CECL has on their Allowance for Credit Loss (ACL) Coverage Ratios.

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