ASU No. 2010 -18 on Receivables

ASU No. 2010–18, Receivables (Topic 310) Effect of a Loan Modification When the Loan is Part of a Pool That is Accounted for as a Single Asset, a consensus of the FASB Emerging Issues Task Force was issued April 2010 and is effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010.

This ASU was issued to provide guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition.

Why Issued?
Diversity in practice has developed on whether a loan that is part of a pool of loans accounted for as a single asset should be removed from that pool upon a modification that would constitute a troubled debt restructuring. The objective of the amendments in this Update is to address the diversity in practice regarding such modifications.

Any entity that acquires loans subject to Subtopic 310-30, that accounts for some or all of those loans within pools, and that subsequently modifies one or more of those loans after acquisition is affected by this ASU.

ASUs are available on the FASB website, http://www.fasb.org/ under Standards.

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