FASB’s Accounting for Credit Losses Standard

Harold Schroeder, member of the Financial Accounting Standards Board, tells Bloomberg BNA that FASB intends its new “current expected credit loss” standard to be “scalable” and to allow banks flexibility to gauge expected loan/credit losses to fit the institution. The new standard requires banks to subtract what they expect to collect from “what is on the books today,” and to record the difference as the reserve or “A minus B =C, ” Schroeder says.  The effective date is 2020 for large institutions. Early adoption is allowed in 2019.
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