In June 2016, FASB unveiled a guidelines for the banks to capture the credit loss by taking into account the expected credit losses over the expected lifetime of the products, and not use the 40 year old “Incurred Loss Model.
Background of the new Current Expected Credit Loss Model (“CECL”)
In 2011, the FASB and the International Accounting Standard Board (“IASB”) partnered to improve and standardize guidelines for impairment losses in both U.S. GAAP and International Financial Reporting Standards (“IFRS”). They proposed a “three-bucket” model
for reporting impairments.
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https://www.linkedin.com/pulse/cecl-new-fasb-accounting-rule-capture-expected-piyush-srivastava?trk=hp-feed-article-title-publish