The CARES Act (the “Act”) provides temporary relief from FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Specifically, as worded in the Act, “no insured depository institution, bank holding company, or any affiliate thereof shall be required to comply with the Financial Accounting Standards Board Accounting Standards Update No. 2016–13 (‘Measurement of Credit Losses on Financial Instruments’), including the current expected credit losses methodology for estimating allowances for credit losses, during the period beginning on the date of enactment of this Act and ending on the earlier of:
(1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 15, 2020 under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates; or
(2) December 31, 2020.”
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