FASB proposes relief for firms transitioning to the credit losses standard

By Amy Leisinger, J.D. The Financial Accounting Standards Board has proposed an Accounting Standards Update (ASU) to ease the entities’ transition to the credit losses standard by providing them with the option to measure certain types of assets at fair value. Under the proposed ASU, preparers could irrevocably elect the fair value option for eligible financial assets measured at amortized cost basis upon adoption of the standard. In a press release, FASB notes that the proposed change would increase comparability of financial statements across institutions that otherwise would report similar instruments using different methodologies and potentially decrease costs. Credit losses standard. Adopted by FASB in June 2016, the standard’s current expected credit losses methodology will replace the incurred loss methodology that financial institutions currently use to recognize credit losses. Under the new methodology, recognition of a credit loss no longer will be delayed…

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