Financial Instruments–Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures



On March 31, 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2022-02, Financial Instruments–Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this Update eliminate the troubled debt restructurings (TDRs) recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments enhance the disclosure requirements for certain modifications of receivables made to borrowers experiencing financial difficulty.

For public business entities, the amendments in this Update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20 within the vintage disclosure required by Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

Transition and Effective Dates

For entities that have adopted Update 2016-13, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities are required to apply the amendments in the Update on a prospective basis, except for the recognition and measurement of TDRs, whereby an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

Early adoption of the amendments in this Update is permitted if an entity has adopted the amendments in Update 2016-13, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments regarding TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures.

Additional Information
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