As a result, when an entity is determining its CECL allowance on demand loans, it should consider the borrowers ability to repay the loan if payment was demanded on the current date. FASB Chair Richard R. Jones stated, "The new ASU responds to feedback . Considers historical experience but not forecasts of the future. This accounting policy election should be considered separately from the accounting policy election in paragraph, No. See. When determining the expected life and contractual amount for purposes of calculating expected credit losses, a reporting entity should not consider expectations of modifications of instruments unless the loan has been restructured. The selection of a model to estimate the allowance for credit losses will depend on the reporting entitys facts and circumstances, including the complexity and significance of the financial instruments being evaluated, as well as other relevant considerations. A reporting entity should consider sources of repayment associated with a financial asset when determining its credit losses forecast under the CECL impairment model, including collection against the collateral and certainembeddedcredit enhancements, such as guarantees or insurance. An entity should ensure the information used, including the economic assumptions, are relevant to the portfolio being assessed. Investor Corp would also need to consider other relevant risk factors (e.g., credit ratings) when determining whether these securities should be pooled at a more granular level. During the current year, Borrower Corp has had a significant decline in revenue. An entity shall consider adjustments to historical loss information for differences in current asset specific risk characteristics, such as differences in underwriting standards, portfolio mix, or asset term within a pool at the reporting date or when an entitys historical loss information is not reflective of the contractual term of the financial asset or group of financial assets. Separate, freestanding contracts (such as credit default swaps or insurance) should not be combined with the underlying financial asset or portfolio for purposes of measuring expected credit losses. Bank Corp originates a loan to Borrower Corp with the following terms.
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