The following scenarios describe ledger entries for adding ECL to an existing lot if you enable the ECL Transition option when you use asset-level expected credit loss (ECL) with a GAAP accounting basis.
The entity is transitioning to the current expected credit loss model and the credit loss entry is flagged as a Transition, that is, ECL Transition = Y on the Book ECL Asset-Level panel. The entity updates an existing lot with Expected Credit Losses of $30.
WRITERS NOTE: Do we need to explicitly explain that selecting ECL Transition option allows you to select the Purchased Impaired option? That you can choose it for first time only when you adopt, or whatever we say on Book Asset-Level page?
Book Asset-Level Transition for US GAAP – AFS
The ledger entries follow for a GAAP accounting basis with an AFS (Available for Sale) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
3003000100
ACCUMULATED UNDISTRIBUTED INCOME(LOSS)
30
1310010419
ALLOWANCE FOR ECL-AFS
30
Book Asset-Level Transition for US GAAP – AFS (Purchased Impaired Asset)
This scenario follows the same transition as in the prior scenario for US GAAP - AFS, but the entry is flagged as Purchased Impaired.
The ledger entries follow for a GAAP accounting basis with an AFS (Available for Sale) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
1310000100
COST OF INVESTMENTS-AFS
30
1310010419
ALLOWANCE FOR ECL-AFS
30
Book Asset-Level Transition for US GAAP – HTM
The ledger entries follow for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.
Ledger Account
Ledger Acct Name
Dr
Cr
3003000100
ACCUMULATED UNDISTRIBUTED INCOME(LOSS)
30
1510010419
ALLOWANCE FOR ECL-HTM
30
Book Asset-Level Transition for US GAAP – HTM (Purchased Impaired Asset)
This scenario follows the same transition as in the prior scenario for US GAAP with HTM, but the entry is flagged as Purchased Impaired.
The ledger entries follow for a GAAP accounting basis with an HTM (Held to Maturity) regulatory category.
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