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Select a section below and enter your search term, or to search all click ASU 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)
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Amendments to Subtopic 326-10
Publication date: 15 Nov 2019
us FASB ASU 2019-10
2. Amend paragraph 326-10-65-1 and its related heading, amend its pending content, with no additional link to a transition paragraph, and amend pending content transition date for all paragraphs that link to paragraph 326-10-65-1 as follows:
Financial Instruments—Credit Losses—Overall
Transition and Open Effective Date Information
> Transition Related to Accounting Standards Updates No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses,
and
No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates326-10-65-1 The following represents the transition and effective date information related to Accounting Standards Updates No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses,
and
No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates:- The pending content that links to this paragraph shall be effective as follows:
- For public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The one-time determination of whether an entity is eligible to be a smaller reporting company shall be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations.
- Subparagraph superseded by Accounting Standards Update No. 2019-10. For public business entities that do not meet the definitionof an SEC filer, for fiscal years beginning after December 15, 2020,including interim periods within those fiscal years
- For all other entities, including not-for-profit entities within the scopeof Topic 958 and employee benefit plans within the scope of Topics960 through 965 on plan accounting,for fiscal years beginning after December 15, 20222021, including interim periods within those fiscal years.
-
Early application of the pending content that links to this paragraph is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.Note: See paragraph 250-10-S99-6 on disclosure of the impact that recently issued accounting standards will have on the financial statements of a registrant.
- An entity shall apply the pending content that links to this paragraph by means of a cumulative-effect adjustment to the opening retained earnings as of the beginning of the first reporting period in which the pending content that links to this paragraph is effective.
- An entity shall apply prospectively the pending content that links to this paragraph for purchased financial assets with credit deterioration to financial assets for which Subtopic 310-30 was previously applied. The prospective application will result in an adjustment to the amortized cost basis of the financial asset to reflect the addition of the allowance for credit losses at the date of adoption. An entity shall not reassess whether recognized financial assets meet the criteria of a purchased financial asset with credit deterioration as of the date of adoption. An entity may elect to maintain pools of loans accounted for under Subtopic 310-30 at adoption. An entity shall not reassess whether modifications to individual acquired financial assets accounted for in pools are troubled debt restructurings as of the date of adoption. The noncredit discount or premium, after the adjustment for the allowance for credit losses, shall be accreted to interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date. The same transition requirements should be applied to beneficial interests for which Subtopic 310-30 was applied previously or for which there is a significant difference between the contractual cash flows and expected cash flows at the date of recognition.
- An entity shall apply prospectively the pending content that links to this paragraph to debt securities for which an other-than-temporary impairment had been recognized before the date of adoption, such that the amortized cost basis (including previous write-downs) of the debt security is unchanged. In addition, the effective interest rate on a security will remain unchanged as a result of the adoption of the pending content that links to this paragraph. Amounts previously recognized in accumulated other comprehensive income as of the adoption date that relate to improvements in cash flows will continue to be accreted to interest income over the remaining life of the debt security on a level-yield basis. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption shall be recorded to income in the period received.
- An entity shall disclose the following in the period that the entity adopts the pending content that links to this paragraph:
- The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle.
- The method of applying the change.
- The effect of the adoption on any line item in the statement of financial position, if material, as of the beginning of the first period for which the pending content that links to this paragraph is effective. Presentation of the effect on financial statement subtotals is not required.
- The cumulative effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of the first period for which the pending content that links to this paragraph is effective.
- An entity that issues interim financial statements shall provide the disclosures in (f) in each interim financial statement of the year of change and the annual financial statement of the period of the change.
- In the year of initial application of the pending content that links to this paragraph, a public business entity that is not within the scope of paragraph 326-10-65-1(a)(1) does not meet the definition of a SEC filermay phase-in the disclosure of credit quality indicators by year of origination by only presenting the three most recent origination years (including the first year of adoption). In each subsequent fiscal year, the then-current origination year will be added in the periods after adoption until a total of five origination years are presented. Origination years before those that are presented separately shall be disclosed in the aggregate. For example, the phase-in approach would work as follows assuming a calendar year-end entity:
- For the first annual reporting period ended December 31, 2X23 2X21, after the effective date of January 1, 2X232X21, an entity would disclose the end of period amortized cost basis of the current period originations within 2X232X21, as well as the two origination years of 2X222X20and 2X212X19. The December 31, 2X232X21end of period amortized cost balances for all prior originations would be presented separately in the aggregate.
- For the second annual reporting period ended December 31, 2X24 2X22, after the effective date of January 1, 2X232X21, an entity would disclose the end of period amortized cost basis of the current period originations within 2X242X22, as well as the three origination years of 2X232X21, 2X222X20, and 2X212X19. The December 31, 2X242X22ending amortized cost basis would be presented in the aggregate for all origination periods before the four years that are presented separately.
- For the third annual reporting period ended December 31, 2X25 2X23, after the effective date of January 1, 2X232X21, an entity would disclose the end-of-period amortized cost basis of the current-period originations within 2X252X23, as well as the four origination years of 2X242X22, 2X232X21, 2X222X20, and 2X212X19. The December 31, 2X252X23ending amortized cost basis would be presented in aggregate for all origination periods before the five years that are presented separately.
- For interim-period disclosures within the years discussed above, the current year-to-date originations should be disclosed as the originations in the interim reporting period.
- For the first annual reporting period ended December 31, 2X23
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022
2021
│Transition Guidance: 326-10-65-3 > Transition Related to Accounting Standards Updates No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,
and
No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief, and No. 2019-10, Financial Instruments— Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates326-10-65-1 The following represents the transition and effective date information related to Accounting Standards Updates No. 2016-13, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,
and
No. 2019-05, Financial Instruments— Credit Losses (Topic 326): Targeted Transition Relief, and No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates:-
The pending content that links to this paragraph shall be effective as follows:
- For public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The one-time determination of whether an entity is eligible to be a smaller reporting company shall be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations.
- Subparagraph superseded by Accounting Standards Update No. 2019-10. For public business entities that do not meet the definitionof an SEC filer, for fiscal years beginning after December 15, 2020,including interim periods within those fiscal years
- For all other entities, including not-for-profit entities within the scopeof Topic 958 and employee benefit plans within the scope of Topics960 through 965 on plan accounting,for fiscal years beginning after December 15, 20222021, including interim periods within those fiscal years.
-
Early application of the pending content that links to this paragraph is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.Note: See paragraph 250-10-S99-6 on disclosure of the impact that recently issued accounting standards will have on the financial statements of a registrant.
- An entity shall apply the pending content that links to this paragraph by means of a cumulative-effect adjustment to the opening retained earnings as of the beginning of the first reporting period in which the pending content that links to this paragraph is effective.
- An entity shall apply prospectively the pending content that links to this paragraph for purchased financial assets with credit deterioration to financial assets for which Subtopic 310-30 was previously applied. The prospective application will result in an adjustment to the amortized cost basis of the financial asset to reflect the addition of the allowance for credit losses at the date of adoption. An entity shall not reassess whether recognized financial assets meet the criteria of a purchased financial asset with credit deterioration as of the date of adoption. An entity may elect to maintain pools of loans accounted for under Subtopic 310-30 at adoption. An entity shall not reassess whether modifications to individual acquired financial assets accounted for in pools are troubled debt restructurings as of the date of adoption. The noncredit discount or premium, after the adjustment for the allowance for credit losses, shall be accreted to interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date. The same transition requirements should be applied to beneficial interests for which Subtopic 310-30 was applied previously or for which there is a significant difference between the contractual cash flows and expected cash flows at the date of recognition.
- An entity shall apply prospectively the pending content that links to this paragraph to debt securities for which an other-than-temporary impairment had been recognized before the date of adoption, such that the amortized cost basis (including previous write-downs) of the debt security is unchanged. In addition, the effective interest rate on a security will remain unchanged as a result of the adoption of the pending content that links to this paragraph. Amounts previously recognized in accumulated other comprehensive income as of the adoption date that relate to improvements in cash flows will continue to be accreted to interest income over the remaining life of the debt security on a level-yield basis. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption shall be recorded to income in the period received.
- An entity shall disclose the following in the period that the entity adopts the pending content that links to this paragraph:
- The nature of the change in accounting principle, including an explanation of the newly adopted accounting principle.
- The method of applying the change.
- The effect of the adoption on any line item in the statement of financial position, if material, as of the beginning of the first period for which the pending content that links to this paragraph is effective. Presentation of the effect on financial statement subtotals is not required.
- The cumulative effect of the change on retained earnings or other components of equity in the statement of financial position as of the beginning of the first period for which the pending content that links to this paragraph is effective.
- An entity that issues interim financial statements shall provide the disclosures in (f) in each interim financial statement of the year of change and the annual financial statement of the period of the change.
- In the year of initial application of the pending content that links to this paragraph, a public business entity that is not within the scope ofparagraph 326-10-65-1(a)(1) does not meet the definition of a SEC filermay phase-in the disclosure of credit quality indicators by year of origination by only presenting the three most recent origination years (including the first year of adoption). In each subsequent fiscal year, the then-current origination year will be added in the periods after adoption until a total of five origination years are presented. Origination years before those that are presented separately shall be disclosed in the aggregate. For example, the phase-in approach would work as follows assuming a calendar year-end entity:
- For the first annual reporting period ended December 31, 2X23 2X21, after the effective date of January 1, 2X232X21, an entity would disclose the end of period amortized cost basis of the current period originations within 2X232X21, as well as the two origination years of 2X222X20and 2X212X19. The December 31, 2X232X21end of period amortized cost balances for all prior originations would be presented separately in the aggregate.
- For the second annual reporting period ended December 31, 2X24 2X22, after the effective date of January 1, 2X232X21, an entity would disclose the end of period amortized cost basis of the current period originations within 2X242X22, as well as the three origination years of 2X232X21, 2X222X20, and 2X212X19. The December 31, 2X242X22ending amortized cost basis would be presented in the aggregate for all origination periods before the four years that are presented separately.
- For the third annual reporting period ended December 31, 2X25 2X23, after the effective date of January 1, 2X232X21, an entity would disclose the end-of-period amortized cost basis of the current-period originations within 2X252X23, as well as the four origination years of 2X242X22, 2X232X21, 2X222X20, and 2X212X19. The December 31, 2X252X23ending amortized cost basis would be presented in aggregate for all origination periods before the five years that are presented separately.
- For interim-period disclosures within the years discussed above, the current year-to-date originations should be disclosed as the originations in the interim reporting period.
- For the first annual reporting period ended December 31, 2X23
- An entity may irrevocably elect the fair value option in accordance with Subtopic 825-10 for financial instruments within the scope of Subtopic 326-20, except for those financial assets in paragraph 326-20-15-2(a)(2), that also are eligible items in Subtopic 825-10.
Pending Content:
Transition Date: (P) December 16, 2019; (N) December 16, 2022
2021
│Transition Guidance: 326-10-65-1Note: These transition date changes will be made in a Maintenance Update.
Copyright #year# by Financial Accounting Foundation, Norwalk, Connecticut.
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