The FASB recently issued guidance on the measurement of credit losses for accounts receivable and contract assets in response to feedback from private company stakeholders.
The new, optional guidance addresses challenges that private companies and certain not-for-profit entities face when applying Topic 326, Financial Instruments — Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue From Contracts With Customers.
The FASB expects the amendments in the Accounting Standard Update to reduce the time and effort necessary to estimate credit losses for current accounts receivable and contract assets while continuing to provide decision-useful information to investors and other financial statement users. Read more.