Lesson: Current Expected Credit Losses (CECL)

In this lesson, Nick Palazzolo, CPA, dives into the Current Expected Credit Losses (CECL) model, a key update enacted by the Financial Accounting Standards Board (FASB) in 2016. Nick clarifies the relevance of CECL for financial investments, loans, and receivables, likening it to the allowance for doubtful accounts to simplify its complex nature. He walks through estimating expected credit losses, leveraging historical data, current economic conditions, and forecasts. The lesson breaks down the recording of credit loss expenses and their financial statement impacts, emphasizing the significance of CECL for updated exam content. Through practical examples and comparisons to traditional accounting practices, Nick ensures a comprehensive understanding of CECL's role in financial reporting, making this lesson essential for mastering modern accounting standards efficiently.