This blog has moved to:



AccountingOnion.com

« "Anything But Market" is the FASB's Mantra for Loan Loss Accounting | Main | Marking Loans to Model is Far Easier and Better than Estimating Loan Loss Allowances: It's Time to Hear from the FASB Members who Changed Their Minds about That »

September 26, 2012

Comments

Osman Sattar


Tom

I’m a relatively new reader to your blog and I understand that you favour market values in accounting. In this article, you say that:

(1) "[B]oth models [the current incurred loss model and the proposed CECL model] are terrible because they both require estimates of future cash flows over a loan term of 5, 10 or even 30 years out".

(2) "How can the value of a loan at its inception be anything different than the net proceeds to the borrower?"

But, in arriving at a market value for loans (which are not generally traded in a market), surely there would be a need to use models, using estimates of future cash flows over the loan terms? And isn’t it likely this would result in a value that is different from the net proceeds to the borrower?

The comments to this entry are closed.

This blog has moved to:



AccountingOnion.com