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A lending institution may receive real estate assets in full or partial satisfaction of a receivable from a borrower experiencing financial difficulty either through surrender of the real estate asset or as a result of formal foreclosure proceedings.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures, which eliminated the accounting guidance for troubled debt restructurings (TDRs) for creditors that have adopted ASU 2016-13. Guidance in this chapter has been updated to reflect the new ASU. Impacted sections are denoted as before or after adoption of ASU 2022-02.
Sales of other real estate owned (OREO), foreclosed property that is classified as held for sale, are accounted for in accordance with ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. The guidance addresses conditions that may prevent derecognition of nonfinancial assets, including real estate assets, at the time of sale. See PPE 6.4 for guidance on accounting for the subsequent sale of real estate assets by a creditor.

PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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