Wiley GAAP 2019

16ASC 310 RECEIVABLES

PERSPECTIVE AND ISSUES

Technical Alert

ASU 2016-13

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. This ASU makes changes to several topics, and adds a new topic—ASC 326.

Effective Date.

The ASU is effective:

• For public business entities that meet the definition of an SEC filer, annual periods beginning after December 15, 2019, and interim periods therein.
• For other public business entities, annual periods beginning after December 15, 2020, and interim periods therein.
• For all other entities, annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.

Early adoption is allowed for all entities for fiscal years beginning after December 15, 2018, including interim periods therein.

Transition.

Except where noted in the following table, entities should use the modified-retrospective approach and record a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period that the entity adopts the guidance. For example, a calendar-year private company that adopts the standard in 2021 records the cumulative effect adjustment on January 1, 2020.

Guidance.

The new guidance affects several topics. Readers should look to those topics for more information. This chapter will outline how ASU 2016-13 affects ASC 310.

ASU 2016-13 changes the accounting for credit ...