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13.1 Effective dates: ASU 2016-01 and ASU 2016-13
Publication date: 31 May 2022
us PwC Loans & investments guide 13.1
Figure LI 13-1 summarizes the effective dates for ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (825-10), Recognition and Measurement of Financial Assets and Liabilities (recognition and measurement) and ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) —Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. Figure LI 13-2 summarizes the effective dates for ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief (impairment), and ASU 2022-02, Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. Targeted improvements were made to both recognition and measurement and impairment in ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.
Early adoption of these standards is allowed in limited circumstances. See LI 13.1.1, LI 13.1.2, and LI 13.1.3 for information on early adoption of each standard.
Figure LI 13-1
Summary of effective dates – ASU 2016-01
Summary of effective dates – ASU 2016-01
Type of reporting entity |
ASU 2016-01: Recognition and measurement |
Public business entities (PBEs)
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Other entities (including not-for-profit organizations and certain employee benefit plans)
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ASU 2020-01 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.
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On November 15, 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which deferred the effective date of ASU 2016-13 for certain public business entities (PBEs) and non-PBEs.
Figure LI 13-2
Summary of effective dates – ASU 2016-13
Summary of effective dates – ASU 2016-13
Type of reporting entity |
ASU 2016-13: Impairment |
PBEs that meet the definition of an SEC filer, excluding smaller reporting companies (SRCs)
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ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
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All other entities including all other PBEs (including SEC filers that are SRCs), private companies, not-for-profit organizations and certain employee benefit plans
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Fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
For entities that have not yet adopted ASU 2016-13, the effective dates for ASU 2019-04, ASU 2019-05, and ASU 2022-02 are the same as the effective date for ASU 2016-13.
For entities that have early adopted ASU 2016-13, ASU 2019-04 and ASU 2019-05 are currently effective and ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
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ASC 326-10-20 defines an SEC filer.
ASC 326-10-20
Securities and Exchange Commission (SEC) filer
An entity that is required to file or furnish its financial statements with either of the following:
a. The Securities and Exchange Commission (SEC)
b. With respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section.
Financial statements for other entities that are not otherwise SEC filers whose financial statements are included in a submission by another SEC filer are not included within this definition.
The one-time determination of whether an entity is eligible to be a smaller reporting company shall be based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations.
13.1.1 Early adoption of ASU 2020-01
A reporting entity is allowed to early adopt the amendments in ASU 2020-01 in an interim period.
13.1.2 Early adoption of impairment standard
Early adoption of the impairment standard is permitted for all reporting entities for fiscal years beginning after December 15, 2018, including the interim periods therein. For the amendments in ASU 2019-04, ASU 2019-05, and ASU 2022-02, early adoption is permitted in any interim period as long as the entity has adopted the amendments in ASU 2016-13.
13.1.3 Early adoption of ASU 2022-02
For entities that have adopted ASU 2016-13, early adoption of ASU 2022-02 is permitted, including adoption in an interim period. If an entity elects to early adopt ASU 2022-02 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. For example, if a calendar year-end entity adopts this guidance in the second quarter of 2022, it will need to adopt the guidance as of January 1, 2022.
An entity may elect to early adopt the amendments related to TDRs separately from the amendments related to vintage disclosures. If an entity elects to early adopt amendments to TDRs, it is required to adopt both the accounting and disclosure amendments relating to modifications of loans with borrowers experiencing financial difficulties concurrently.
13.1.3.1 Early adoption of ASU 2022-02 – SEC filings
If a calendar year-end public entity adopts the new guidance in ASU 2022-02 in an interim period, it will need to reflect the change as of January 1, 2022. This is required even if it is not adopted in the first quarter. If an entity does not adopt the guidance in the first quarter (for example, they adopt in Q3), the entity will include the recast prior quarter information within the year-to-date disclosures presented in the Q3 financial statements and comparative 2022 information in future filings (e.g., in the 2022 information presented for comparative purposes in 2023 quarterly filings). Companies should consult with their auditors and SEC counsel to determine whether previously issued Form 10-Qs may be required to be recast (e.g., via a Form 8-K) in connection with capital markets transactions and/or registration statements if the guidance is not adopted in the first quarter.
Entities may also need to disclose revised quarterly supplementary financial information in the Form 10-K if the recast data is materially different from the amounts previously disclosed in the Form 10-Qs (as per Regulation S-K Item 302). The selected financial data table in the Form 10-K (if presented on a voluntary basis) is not impacted because the prior year amounts are not affected by the adoption of the new guidance.
Entities also need to consider if there were any significant changes in internal controls over financial reporting in the period of adoption that may need to be disclosed in Item 9A of the Form 10-K if ASU 2022-02 (if adopted in the fourth quarter) or in Item 4 of the Form 10-Q if adopted in an interim period.
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