ASC 310-10-35-16 states that a loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and contractual principal payments of a loan will be collected as scheduled in the loan agreement in terms of timing and amount. For a loan that has been restructured in a troubled debt restructuring, the contractual terms of the loan agreement refers to the contractual terms specified by the original loan agreement, not the contractual terms specified by the restructuring agreement (see ASC 310-40-35-8). The term ''probable'' used in this guidance is consistent with its use in ASC 450-20, which defines probable as an area within a range of the likelihood that a future event or events will occur confirming the loss. Many times, companies use loans classified as non-performing as a starting point or proxy for identifying impaired loans.

A loan is not impaired if the delay or shortfall is insignificant, or if the creditor expects to collect all amounts due, including interest accrued at the contractual interest rate for the period of delay. Thus, a demand loan or other loan with no stated maturity is not impaired if the creditor expects to collect all amounts due, including interest accrued at the contractual interest rate, during the period the loan is outstanding.