The Exposure Draft aims to address stakeholder feedback indicating that identifying, analyzing, and documenting macroeconomic data as part of developing reasonable and supportable forecasts is challenging and costly and generally does not have a material effect on the allowance for shorter-term receivables.
Stakeholders also noted that the ability to consider collection activity after the balance sheet date would reduce both complexity and level of effort without negatively impacting decision-useful information for financial statement users.
Under the Exposure Draft, when developing their forecasts, private companies and not-for-profit entities that have not issued, or are not a conduit bond obligor for, securities traded, listed, or quoted on an exchange or over-the-counter market would be allowed to adopt a practical expedient to assume that current conditions as of the balance sheet date persist throughout the forecast period.
Additionally, entities would be allowed to make an accounting policy election to consider post-balance sheet date collections when estimating credit losses. The FASB has requested feedback on a number of questions related to the proposed amendments, including transition and effective date provisions.
The full text of the Exposure Draft can be found here.
Published: 01/06/2025
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