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Estimating Minimum Allowance for Current Expected Credit Losses

Even with zero historical losses, the expected credit loss is not zero. The Rule of Three can be used to estimate the likelihood of a loss, as explained in the handout page.

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CECL Minimum Allowance Handout

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Estimating the minimum amount of current expected credit loss allowance in a scenario where the company had no previous history of write-offs or customer defaults.

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