CECL: The Current Expected Credit Loss Model Under ASC 326

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In June 2016, the FASB issued Accounting Standards Update 2016-13 (ASC 326). Among many changes, the ASU significantly changes the impairment model for most financial assets that are measured at amortized cost (and certain other instruments) from an incurred loss model to an expected loss model that will be based on an estimate of current expected credit loss (“CECL”). Our publication includes guidance and examples.

Editor’s note:

On July 30, 2025, the FASB has issued ASU 2025-05 to simplify estimating credit losses for current accounts receivable and current contract assets. Please refer to our BDO Bulletin, Measurement of Credit Losses for Accounts Receivable and Contract Assets. BDO’s publications have not been updated to reflect this recent ASU.

On November 12, 2025, the FASB has issued ASU 2025-08 to expand the population of acquired financial assets subject to the “gross-up approach” for measuring credit losses to apply to seasoned purchased loans. Please refer to our BDO Bulletin, Recognition of Credit Losses for Some Purchased Loans. BDO’s publications have not been updated to reflect this recent ASU.

BDO’s Accounting Advisory practice can help navigate the complexities of applying U.S. GAAP and adopting new accounting guidance.

Other Publications Accounting Credit Losses Financial Services

August 23, 2022

Timothy Kviz Managing Principal, SEC Services, Assurance