Complying with the New Expected Credit Loss Model

Learning Objectives

• Identify the latest accounting and financial reporting requirements of the current expected credit loss model for certain financial instruments under ASC 326.
• Recall answers to frequently asked questions about applying the new requirements to nonpublic entities that aren’t financial institutions.
• Evaluate changes in the present value of expected cash flows.
• Identify disclosure requirements for financing receivables and debt securities.

Course Description

This course covers accounting guidelines for treating credit losses in financial assets. It introduces the concept of expected credit losses (ECL), which replaces the traditional incurred loss model. Under this approach, entities recognize credit losses based on expected future losses rather than waiting for losses to be incurred. 

In this CPE Course, we will discuss the various aspects, including recognizing credit losses using an allowance approach, factors influencing the estimation of expected credit losses, and disclosures required to provide transparency to stakeholders.

Furthermore, it delves into specific scenarios such as off-balance sheet exposures, the credit risk associated with variable consideration, and the treatment of credit-deteriorated assets. The guidelines also cover presentation and disclosure requirements, emphasizing the importance of transparent reporting to help users understand the entity's exposure to credit risk and the methodology used to estimate credit losses. 

Join this CPE Course and take your credit risk analysis skills to the next level. Don't miss this opportunity to stay ahead in the ever-evolving world!

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Key topics covered:

• Advanced credit loss modeling techniques
• Off-balance sheet credit exposures
• Purchased financial assets with credit deterioration
• Equity method investments
• Changes in the present value of expected cash flows
• Disclosure requirements for financing receivables and debt securities

Overview

• Applicability of Accounting Standards Codification (ASC) topic 326

  3 mins
• Common items outside of scope

  15 mins
• Adjustments to historical experience

  28 mins
• Practical expedient for collateral-dependent assets

  47 mins
• Disclosures – Financing receivables

  66 mins
• Applicability to nonprofits

  84 mins
• Annual disclosure - Allowance for credit losses

  99 mins