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A loan receivable is recorded for loans that a reporting entity originates or purchases. Loans may be purchased individually, in pools, or as part of a business combination. A loan or portfolio of loans may also need to be recorded on the balance sheet as a result of applying the guidance in ASC 810, Consolidation. This chapter provides an overview of loan types and discusses the lender’s accounting for originated and purchased loans, including:
  • Classification of loans on the balance sheet as held for investment or held for sale
  • Accounting for loan origination fees and costs

This chapter also discusses the accounting for loan commitments and mortgage-banking activities.
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. This chapter also assumes an entity has adopted ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging – Portfolio Layer Method.
Figure LI 4-1 illustrates the primary sources of authoritative guidance on accounting for loans and the recognition of interest income.
Figure LI 4-1
Authoritative guidance on accounting for loans and recognition of interest income
ASC reference
Title
Location of discussion in guide
Receivables – Overall
Receivables – Nonrefundable Fees and Other Costs
LI 4.4 and LI 6
Receivables – Loan refinancing and restructuring
Receivables – Troubled Debt Restructurings by Creditors
LI 10 (after adoption of ASU 2022-02)
LI 10A (before adoption of ASU 2022-02)
Financial Instruments – Credit Losses
LI 7 and LI 9
Property, Plant, and Equipment – Real Estate Sales
Financial Services – Mortgage Banking

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