ASC 310-10 does not specify how a creditor should identify loans that are to be individually evaluated for collectability (unless they were restructured in a troubled debt restructuring). A creditor should apply its normal loan review procedures in making that judgment. The guidance does, however, identify some sources of information that are useful in identifying loans for evaluation, including a specific materiality criterion, regulatory reports of examination, internally generated "watch lists," and management reports of total loan amounts by borrower (see ASC 310-10-35-14). In addition, institutions and professionals typically look to other guidance and industry practice to further support implementation of impairment definitions (for example, see additional industry and regulatory guidance in ARM 3560.123).

After a loan has been individually identified for evaluation, a creditor shall not aggregate loans with common risk characteristics when assessing whether loans are impaired. Only if a creditor can identify which individual loans are impaired shall an ALLL be measured for individual loans under ASC 310-10-35, as discussed below.