10. Stakeholders questioned whether an entity is required to determine that a borrower will be able to continually replenish collateral in accordance with the contractual terms of the financial asset(s) to apply the collateral maintenance practical expedient in accordance with paragraph 326-20-35-6. The amendments in this Update that relate to estimating credit losses for financial asset(s) secured by collateral maintenance provisions clarify that an entity should reasonably expect the borrower to continually replenish collateral securing the financial asset(s) in accordance with the contractual terms of the financial asset to apply the practical expedient. An entity is not required to consider remote scenarios in making this determination.

11. Additionally, stakeholders questioned how an entity should determine its estimate of expected credit losses if the fair value of the collateral securing the financial asset(s) is less than its amortized cost basis. The amendments in this Update clarify that an entity should estimate expected credit losses related to the amount of the amortized cost basis that is greater than the fair value of the collateral. However, the allowance for credit losses would be limited to the difference between the amortized cost basis and the fair value of the collateral.