FASB Proposes Expanded Disclosures and Improved Accounting Related to the Credit Losses Standard

Troubled Debt Restructurings, Vintage Disclosures Addressed

Norwalk, CT, November 23, 2021—The Financial Accounting Standards Board (FASB) today issued a proposed Accounting Standards Update (ASU) intended to improve the decision usefulness of information provided to investors about certain loan refinancings, restructurings, and writeoffs. Stakeholders are encouraged to review and provide feedback on the proposed ASU by December 23, 2021.

The proposed ASU addresses areas identified by the FASB as part of its Post-Implementation Review (PIR) process, which evaluates whether a standard is achieving its objective by providing investors with relevant information. Since issuing its credit losses standard, which introduced the current expected credit losses (CECL) model in 2016, the FASB has provided resources to monitor and assist stakeholders with its implementation. These activities include forming a Credit Losses Transition Resource Group (TRG), conducting outreach with stakeholders of all types, developing educational materials and staff question-and-answer guidance, conducting educational workshops, and performing archival review of financial reports.

Troubled Debt Restructurings by Creditors That Have Adopted CECL

During the FASB’s Post-Implementation Review of the credit losses standard, including a May 2021 roundtable, investors and other stakeholders questioned the relevance of the troubled debt restructuring (TDR) designation and the decision usefulness of disclosures about those modifications. Some noted that measurement of expected losses under the CECL model already incorporates the forward-looking aspects of the TDR model and that relevant information for investors would be better conveyed through enhanced disclosures about certain modifications.

The amendments in this proposed ASU would eliminate the accounting guidance for TDRs by creditors while enhancing disclosure requirements for loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty.

Vintage Disclosures—Gross Writeoffs

The FASB also received feedback that an illustrative example, which shows how a public business entity might meet the disclosure requirement to present financing receivable information by year of origination (commonly referred to as the “vintage disclosures”), includes a line item for gross writeoffs and gross recoveries for each origination year. Some stakeholders indicated that it was unclear whether gross writeoffs and recoveries are required to be presented in the vintage disclosures because that information is not listed as a specific disclosure requirement.  Also, the disclosure of gross writeoffs was cited by numerous investors as an essential input to their analysis.

To address this feedback, the amendments in this proposed ASU would require that a public business entity disclose current-period gross writeoffs by year of origination for financing receivables and net investment in leases.

The proposed ASU is available at