In this Not-for-Profit Section Ideacast, Paul Preziotti, partner at Johnson Lambert LLP, discusses FASB ASU 2025-05—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.
The guidance, which is optional, addresses challenges faced by stakeholders when applying Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers.
These challenges included the cost and complexity of developing a reasonable and