ALLL / ASC 310-10-35 (FAS 114)

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ASC 310-10-35 (FAS 114)

• Q factors

  Documentation

  Institutions should begin to gather the necessary documentation, both internal and external, before commencement of the ALLL calculation. Many sources of information, such as appraisal values or cash flow schedules, may require updating prior to the time of the calculation. As such, institutions should be mindful of documentation requirements as they begin to plan for their ALLL calculation.

• ASC 310-10-35 (FAS 114)

  ASC 310-10-35 (FAS 114)

  ASC 310-10-35 (FAS 114) loans, or “impaired” loans, are calculated individually, as the parameters of each loan and its measure of loss will be unique. There are various ways to value these loans, including fair market value of collateral, net present value of future cash flows, and loan pricing.

• ASC 450-20 (FAS 5)

  Loan Classification

  Before accounting for expected credit losses, institutions must first determine which loans belong in FAS 5 (ASC 450-20) status and which belong in FAS 114 (ASC 310-10) status. It is important that institutions are consistent with how they classify their loans, as inconsistency can drastically change the end ALLL figure and draw scrutiny from regulators.