act480 mod 8
Portfolio Project Option #1: Case: The Future of Measuring Expected Credit Loss
During 2013, the FASB directed its staff to move forward with the drafting of an impairment standard containing a “Current Expected Loss (CECL) Model” with the purpose to better disclose to corporate stakeholders a net realizable measurement for financial assets and liabilities. This FASB measure came about specifically to address the concerns from the Great Recession regarding the true net value of long-term financial assets, like mortgage loan assets held by financial institutions and traded debt, such as the $30 billion in mortgage debt sold to the public during 2008 before it went bankrupt. Currently, Jed Miller is the corporate controller for ABC Corporation looking to purchase high-yielding Citibank mortgage assets at low market price.
Required: As an accountant of ABC Corporation, after reading the two articles in required reading and locating two additional peer-reviewed sources on the topic, provide an appraisal of the expected loss model for Mr. Miller of the CECL. Be sure to compare it to the allowance for doubtful accounts for accounts receivables and address the huge monetary loss the CECL model might have saved ABC Corporation, who purchased Lehman mortgage assets in 2008.
Your well-written paper must be 8-10 pages, in addition to title and reference pages. The paper should be formatted according to the CSU-Global Guide to Writing and APA Requirements.(Links to an external site.) Cite at least five peer-reviewed or academic sources, in addition to the required reading for the module.
I am the credit controller of ABC Corporation and I have incorporated the use of contemporary financial management and resolution tools in the management of finances in the company. The 2008 recession is one that has had a rather great impact on the current environment and this is because it affected many companies and individuals towards the end of the first decade of the 21st century. Companies went through numerous losses and the reason for this is the fact that their accounts had not been well managed by the various people associated with the institutions.
ABC is one of the companies that went through numerous challenges and the reason for this is that it was using Allowance for Doubtful Accounts method of recording information for the company. The method indicated here is not quit effective and after the recession it engaged in Current Expected Loss (CECL) Model in managing the finances of the company. Going through the manner that I as the credit manager managed to incorporate this method and reviewing the loss model is imperative in having people understand the manner through which the method enabled the company save itself in 2008 while purchasing Lehman mortgage assets.
(2,660 words)