There is limited guidance for non-impaired loans acquired in a transfer other than a business combination where the entities are not under common control. ASC 860-20-25-13 provides a basis for the practice of not recording or carrying over an ALLL when non-impaired loans are acquired in a transfer other than a business combination. The guidance notes that under no circumstances should an ALLL be initially recorded for loans where the transferor regains control of assets (pursuant to ASC 860-20-25-8 related to regaining control over asset previously sold, which previously were accounted for appropriately as having been sold).

An ALLL should not be recorded when an asset is initially purchased and recorded at its fair value. In the case of loans that are initially recognized at fair value, expected or reasonably predictable events should have already been considered and appropriately incorporated (based on the probability of occurrence) in the estimate of the loans' fair value. In the case of an originated loan, for example, this concept is accomplished by recording the loan at its cost, because the interest rate reflects the debtor's credit risk and corresponding expected credit losses.

The subsequent accounting for non-impaired purchased loans should follow generally accepted accounting principles for the loans in question, including the guidance provided by ASC 450-20, ASC 310-10, and ASC 948.