History of Credit Losses
What major 21st century event caused large debate around accounting for credit losses?
The Global Financial Crisis
Current guidance requires management to have models to estimate their expected credit losses. Name a factor that management can consider within their models.
Literally anything (within reason)
In the development of ASU 2016-13, what was one of management's biggest complaints?
Loss of flexibility from recording all expected credit losses
When was the last time our group got confused about what a credit loss is?
This morning
There have been 3 standard setters (CAP, APB, and FASB). Which of the three did not issue a standard on credit losses we considered major?
The APB
Which of the value relevance approach or the valuation approach had an impact on ASU 2016-13?
Both approaches
What industry's biggest accrual is credit losses?
Banking
FINAL JEOPARDY: Professor Linsmeier's sister is the childhood best friend of one of our group member's mothers. Who is it?
Dan
When was the most recent proposed standard on the accounting for credit losses? (Hint: It's pretty recent)
November 23, 2021
What element of the conceptual framework do credit losses fit under?
None! They're a contra-asset
How could firms use signalling through their credit loss provision?
Recording a higher credit loss amount, in an attempt to show they can still be profitable in a worst case scenario