Abstract
The manuscript describes the financial reporting impact on lenders of a new accounting rule, referred to as CECL, for current expected credit losses. Starting in 2020 all lending institutions that issue GAAP financial statements are required to apply the new CECL accounting method for recognizing credit losses. This new method is a departure from the former “incurred loss” accounting method that used information from past events and current conditions to estimate loan losses. The new method, CECL, recognizes loan losses that are expected to occur in the future. The annual results presented in the manuscript from 2018 through 2022, and the quarterly results presented from 2020 through 2022, show that the new CECL accounting method significantly affected the financial reporting of lenders and shows the challenges lenders faced in implementing the new accounting rule.
Recommended Citation
Schneider, Douglas K. and McCarthy, Mark
(2026)
"CURRENT EXPECTED CREDIT LOSSES (CECL): THE IMPACT OF ACCOUNTING STANDARDS CODIFICATION 326 ON LENDING INSTITUTIONS,"
The Coastal Business Journal: Vol. 21:
No.
1, Article 1.
Available at:
https://digitalcommons.coastal.edu/cbj/vol21/iss1/1