
The Monetary Accounting Requirements Board launched an accounting requirements replace Thursday geared toward enhancing the usefulness of knowledge supplied to buyers about sure mortgage refinancing, troubled debt restructurings, classic disclosures and gross write-offs, amending its credit score losses customary.
Throughout FASB’s post-implementation evaluation of the 2016 credit score losses customary, buyers and different stakeholders who participated in a Might 2021 roundtable questioned the relevance of the troubled debt restructuring (TDR) designation and the usefulness of disclosures about such modifications. A few of the individuals famous that measurement of anticipated losses underneath the at present anticipated credit score losses, or CECL, mannequin already incorporates losses realized from restructurings which can be TDRs and that related data for buyers can be higher communicated by enhanced disclosures about sure modifications.
The amendments within the new ASU would get rid of the accounting steerage for TDRs by collectors which have adopted CECL whereas enhancing the disclosure necessities for sure mortgage refinancing and restructurings by collectors made to debtors experiencing monetary issue.
“The brand new ASU responds to suggestions we acquired from buyers and different stakeholders throughout our in depth post-implementation evaluation (PIR) of the credit score losses customary,” mentioned FASB chair Richard Jones in an announcement Thursday. “The amendments create a single mannequin for mortgage modification accounting by collectors whereas offering improved mortgage modification and write-off disclosures.”
Monetary Accounting Requirements Board chairman Richard Jones at Monetary Executives Worldwide’s Present Monetary Reporting Insights convention
Within the space of classic disclosures and gross write-offs, the disclosure of gross write-off data by 12 months of origination was cited by quite a few buyers as a necessary enter to their evaluation throughout the post-implementation opinions of the CECL customary. To deal with this suggestions, the amendments within the new requirements replace require {that a} public enterprise entity disclose current-period gross write-offs by 12 months of origination for financing receivables and web funding in leases.
The ASU consists of detailed data on the efficient dates of the amendments.