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ASC 310-10-35 applies to creditors in all industries and to all loans that are identified for evaluation, uncollateralized as well as collateralized, except the following:
  1. Large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment. Those loans may include, but are not limited to, credit card, residential mortgage, and consumer installment loans. See ARM 3560.112
  2. Loans that are measured at fair value or at the lower of cost or fair value, for example, in accordance with ASC 948, Financial Services -- Mortgage Banking, or other specialized industry practice.
  3. Leases as defined in ASC 840, Leases.
  4. Debt securities as defined in ASC 320, Investment-Debt and Equity Securities.
All loans that are formally restructured in a troubled debt restructuring involving a modification of terms of a receivable, including those involving a receipt of assets in partial satisfaction of a receivable, are within scope of ASC 310-10. Identification of troubled debt restructurings is addressed in ASC 310-40, Receivables, Troubled Debt Restructurings by Creditors. See ARM 3560.4.
Generally, groups of loans not meeting the scope criteria above, including smaller-balance homogeneous loans that are identified as impaired (e.g., non-performing), are collectively evaluated for impairment and measured under ASC 450-20 (see ARM 3560.112).A creditor needs to apply judgment based on individual facts and circumstances to determine what represents large groups of small-balance homogeneous loans.
The ASC Master Glossary defines a loan as "a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in the creditor's Statement of Financial Position. Examples include, but are not limited to, accounts receivable (with terms exceeding one year) and notes receivable." Note that accounts receivable with terms less than one year may be evaluated for impairment under ASC 450-20.
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