ASU 2016-13: Allowance for Credit Losses
The objective of this course is to address the changes made by ASU 2016-13 to the recording of credit losses on financial instruments. ASU 2016-13 introduces  new ASC 326 and its new expected credit losses model which replaces the current incurred loss model.  ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.
Topics include reviewing examples of types of assets subject to the expected credit loss model, how to present the new allowance for credit losses on the balance sheet, considering historical, current conditions and forecasted future information to measure credit losses, how to use the new model for trade receivables, loans, held-to-maturity debt securities, the new impairment model for available-for-sale debt securities, examples of entities under common control exempt from the model, disclosures, and more.
This course uses materials entitled The New Allowance for Credit Losses ASU 2016-13- Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, authored by Steven C. Fustolo CPA.
Course information
Course No. F220
Format: Online pdf (89 pages).
Prerequisites: Basic understanding of U.S. GAAP
Advance Preparation:None
Level: Overview
CPE Credit: 2 Hrs.
Field of Study: Accounting/Technical
Course expiration:Â Â You have one year from date of purchase to complete the course.
Course Revision Date: February 2026
Objectives
Upon completion of this course, you will be able to:
- Recognize examples of assets that are and are not subject to the ASC 326-20 expected credit loss model
- Recognize the model that ASU 2016-13 uses to deal with credit losses
- Recall how an entity should present the new allowance for credit losses on the balance sheet
- Identify examples of entities that are under common control
- Recognize two elections that can be made under ASU 2025-05
- Recall how subsequent collections of trade receivables are measured in the year-end allowance balance
- Identify how a decline in a held-to-maturity debt security is accounted for
- Recognize the new impairment model for available-for-sale debt securities under ASC 326-30
- Recognize some new and not new disclosures under ASU 2016-13
Topics of Discussion:
Previous GAAP- Incurred Loss Model (Pre- 2023)
New ASC 326, Financial Instruments- Credit Losses
Recent FASB ASUs Targeted at ASC 326’s Credit Losses
ASU 2016-13 Amendments
ASC 326-20 Expected Credit Loss Model
Overall Scope of ASC 326-20
General Amendments to ASC 326-20 Made by ASU 2016-13
New Expected Credit Loss Model
Subsequent Measurement -Reporting Changes in Expected Credit Losses
Financial Statement Presentation of Allowance Balance and Activity
Loans and Trade Receivables- Common Control
Examples from ASU 2016-13
Financial Assets Secured by Collateral
Purchased Financial Assets With Credit Deterioration NEW per ASC 326-10
Held-to-Maturity Debt Securities- ASC 326-20
Basic GAAP Rules- Debt Securities-ASC 320
Held-to-Maturity (HTM) Debt Securities and ASC 326-20
HTM Debt Securities and the Expected Credit Loss Model in ASC 326-20
Investments in Certificates of Deposit (CDs) and Money Market Accounts
Available-For-Sale Debt Securities- Impairment- ASC 326-30
Implementation of ASU 2016-13
Sample Disclosures- ASU 2016-13
