A PDF version of this publication is attached here: Loans & investments guide (PDF 4.5mb)
PwC is pleased to offer our updated Loans and investments guide. This guide is intended to help our clients and other interested parties implement and apply the applicable accounting and reporting standards.
This guide discusses the accounting for loans and investments, including the recognition of interest income and impairment. This guide also discusses the accounting for loans and investments purchased with credit deterioration, modification or restructuring of a loan (including troubled debt restructuring before the adoption of ASU 2022-02 Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures), loan foreclosures, and sales of real estate.
The FASB has issued two standards, as amended, that address the accounting for financial instruments, ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The FASB has subsequently issued amendments that clarify the guidance introduced by ASU 2016-01 and ASU 2016-13.
With the exception of ASU 2022-02, this guide assumes that ASU 2016-13 (and its subsequent amendments) has been adopted. Portions of this guide assume that ASU 2022-02, has been adopted. Although some significant aspects of the accounting for loans and investments have changed as a result of ASU 2016-01 and ASU 2016-13 (for example, the accounting for equity securities and the accounting for impairments of loans and securities), much of the accounting for these instruments remains the same.
This guide summarizes the applicable accounting literature, including relevant references to and excerpts from the FASB’s Accounting Standards Codification. It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues.
This guide should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
References to US GAAP
Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly labelled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other PwC guidance
This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:
  • Business combinations and noncontrolling interests (BCG)
  • Consolidation (CG)
  • Equity method investments and joint ventures (EM)
  • Derivatives and hedging (DH)
  • Fair value measurements (FV)
  • Financial statement presentation (FSP)
  • Financing transactions (FG)
  • Foreign currency guide (FX)
  • Insurance contracts (IG)
  • Property, plant, equipment and other assets (PPE)
  • Reference rate reform (REF)
  • Revenue from contracts with customers (RR)
  • Transfers and servicing of financial assets (TS)

Summary of significant changes
The following is a summary of recent noteworthy revisions to the guide. Additional updates may be made to future versions to keep pace with significant developments.
Revisions made in May 2024
LI 5, Investments in life insurance contracts and captive
  • Captive accounting principles previously included in LI 5.2.4 was moved to LI 5.2.1.

Revisions made in January 2024
LI 8, Impairment of available-for-sale debt securities
  • LI was updated to include Question LI 8-5, which provides considerations related to assessing whether it is more likely than not that a reporting entity will be required to sell impaired available-for-sale securities.

This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.
The FASB material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission.
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