FASB CODIFICATION TOPIC 326 (CECL)
ASC 310 & CECL Credit Loss Provisioning Guide
Master standard guide on estimating lifetime expected credit losses under FASB ASC 326 (CECL). Sourced from FASB Standards ↗
CECL Aging Matrix & Reserve Journal Entry
Gross AR Balance: $2,500,000
- Current (1% Loss Rate): $1,500,000 → Reserve = $15,000
- 1–30 Days (3% Loss Rate): $600,000 → Reserve = $18,000
- 31–60 Days (10% Loss Rate): $250,000 → Reserve = $25,000
- 61–90+ Days (30% Loss Rate): $150,000 → Reserve = $45,000
Total Required CECL Allowance = $103,000
Period Bad Debt Provision Journal Entry:
Debit: Bad Debt Expense ($103,000)
Credit: Allowance for Doubtful Accounts ($103,000)
- Current (1% Loss Rate): $1,500,000 → Reserve = $15,000
- 1–30 Days (3% Loss Rate): $600,000 → Reserve = $18,000
- 31–60 Days (10% Loss Rate): $250,000 → Reserve = $25,000
- 61–90+ Days (30% Loss Rate): $150,000 → Reserve = $45,000
Total Required CECL Allowance = $103,000
Period Bad Debt Provision Journal Entry:
Debit: Bad Debt Expense ($103,000)
Credit: Allowance for Doubtful Accounts ($103,000)