Compare CECL vs incurred loss

Q: Compare CECL vs incurred loss

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Question

CECL vs. the Prior Incurred Loss Model

Context

You are advising on US GAAP credit loss estimation for a lending portfolio. Compare the Current Expected Credit Loss (CECL, ASC 326) framework to the prior incurred loss (ALLL) model. Focus on:

Lifetime expected loss estimation under CECL (methods, assumptions).
Use of "reasonable and supportable" forward‑looking forecasts (including reversion).
Pooling/segmentation requirements.
Impacts on the allowance level and earnings volatility.

Provide a concise, structured explanation highlighting key differences and practical implications for modeling and reporting.

Compare CECL vs incurred loss

CECL vs. the Prior Incurred Loss Model

Context

Solution (Locked)

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