Accounting for credit losses on financial instruments

The introduction of revised accounting treatment for current expected credit losses (CECL) will overhaul reporting of losses, says Jeroen Van Doorsselaere, IAS/IFRS expert at Wolters Kluwer Financial Services

Now that the  US Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) No 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, this standard introduces a new impairment model. Commonly known as the CECL (current expected credit losses) model, this represents a shift from the current incurred loss model.

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