Applicability
- Private companies
- Certain not-for-profit entities
FASB proposes expedients for private companies and NFPs
Defining Issues | December 2024
The proposal provides expedients for estimating credit losses for current accounts receivable and contract assets.
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When estimating expected credit losses, the proposed ASU would permit an entity to (1) elect a practical expedient to assume current economic conditions as of the balance sheet date will persist throughout the reasonable and supportable forecast period and (2) make an accounting policy election to consider cash collection activity after the balance sheet date.
Key impacts
The proposed ASU is expected to reduce the cost and complexity of applying ASC 326 to current accounts receivable and current contracts assets arising from transactions accounted for under ASC 606.
Private companies and certain not-for-profit entities may elect a practical expedient to assume current economic conditions as of the balance sheet date will persist throughout the reasonable and supportable forecast period requiring no adjustment to historical loss information to reflect changes in the macroeconomic data.
An entity that elects the practical expedient may also make an accounting policy election to consider cash collection activity after the balance sheet date when estimating expected credit losses.
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Resource
Handbook: Credit impairment
Latest edition: Our updated guide to the accounting, presentation and disclosures of CECL
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Jack Pohlman
Partner, Audit, KPMG US
Danielle Imperiale
Managing Director, Dept. of Professional Practice, KPMG US
Jack Pohlman
Partner, Audit, KPMG US
Danielle Imperiale
Managing Director, Dept. of Professional Practice, KPMG US
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