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Section 3130: Impairment of a Loan
[U.S. GAAP Codification Topic]
310 Receivables
310-10 Overall
310-20 Nonrefundable fees and other costs
310-30 Loans and debt securities acquired with deteriorated credit quality
310-40 Troubled debt restructurings by creditors
[U.S. GAAP before the Codification]
SFAS No. 114, May 1993, Accounting by Creditors for Impairment of a Loan
1. A loan is impaired
--> when (a) is probable
(a) all amounts due from a loan will not be collected
2. To determine whether a loan is impaired
--> apply (b)
(b) a creditor's normal loan review procedures
3. Impairment loss
= carrying amount of a loan - one of the following
(c) present value of expected future cash flows from a loan
(d) observable market price of a loan
(e) fair value of the collateral: collateral-dependent loan
4. SEC Staff Accounting Bulletin (SAB) Topic 6L
"Accounting for loan losses by registrants engaged in lending activities"
--> Provides guidance on the impairment of a loan
--> for SEC registrants
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