Alert: FASB Accounting Standards Update No. 2019-05 – Financial Instruments: Credit Losses

Category: US GAAP

Alert: FASB Accounting Standards Update No. 2019-05 – Financial Instruments: Credit Losses

On May 15, 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-05 Financial Instruments – Credit Losses (Topic 326):Targeted Transition Relief. The ASU provides transition relief for entities adopting ASU 2016-13 Financial Instrument – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The ASU provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost. The election must be applied on an instrument-by-instrument basis and is not available for held-to-maturity debt securities.

For entities that have adopted ASU 2016-13, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The modified-retrospective approach is used when applying the ASU with some exceptions.

For all other entities, the effective date and transition requirements will be the same as those in ASU No. 2016-13.

To access the full script of ASU No. 2019-05, click here.

To access the full script of ASU No. 2016-13, click here.

This communication contains a general overview of the topic and is current as of May 15, 2019. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2019. All rights reserved.

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Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.