As the country went through the financial crisis in the mid 2000s, related to mortgage portfolios, the accounting guidance for reporting losses was challenged.  GAAP was using an “incurred loss” for recognizing credit losses when a loss was probable. Users were adjusting decision models for possible “expected losses”.  Users criticized the delay in reporting losses and also what appeared to be diversity in the application of “probable”.  As a result, FASB was asked to review the guidance for recording credit losses.  ASU 2016-13 Measurement of Credit Losses on Financial Instruments was issued after an eight-year period of development. Although the standard was developed in response to loans and debt securities, FASB issued the standard to cover most financial assets including trade receivables.  The standard calls for recording expected credit losses that reflects losses that are expected over the contractual life of the asset. In almost all cases credit losses are recognized upon initial recognition of the asset. Information to consider will include historical loss information, adjustments to historical information for changes in asset specific risks, current economic conditions, and reasonable and supportable forecasts about future conditions (with reversion to historical loss information for future periods beyond those that can be reasonably forecast). Pooling is required when assets share similar risk characteristics.  The expected current credit loss and the allowance for credit losses may be determined using various methods.  No particular method is required.  Example 5 from the standard which calculates the expected credit loss for trade receivables is presented.  This example uses a provision matrix (an aging of receivables) to calculate the expected credit loss.   The nature of Purchased Credit Deteriorated (PCD) financial assets are discussed along with an example of how to record them.  CECL disclosures are explained and sources of information on CECL accounting in general and articles discussing CECL for trade receivables are provided.   The course ends with the actions taken by Congress during 2019 and 2020 to challenge FASB’s accounting for credit losses.