v0.7 prototype. Simplified loss-rate method for short-duration trade receivables. Not for loans, debt securities, or longer-duration instruments.
ASC 326-20 + SAB TOPIC 119 + ASU 2025-05
CECL Allowance Estimator
Current Expected Credit Loss model for trade receivables. AR aging buckets × historical loss rates × Q-factor current-conditions adjustments × reasonable-and-supportable forecast. Output: allowance, build-up by bucket, ASC 326-20-50 required disclosures.
Step 1 — AR aging × historical loss rates
Pull aging from trial balance. Use 3-5 years of trailing write-off data per bucket.
Bucket
AR balance ($)
Historical loss rate (%)
Current (0-30 days)
31-60 days past due
61-90 days past due
91-120 days past due
Over 120 days past due
Step 2 — Current conditions (Q-factor) adjustments
Adjust historical baseline for current conditions different from history. ASC 326-20-30-7.
Honest limits: This is a simplified loss-rate estimator for short-duration trade receivables. ASC 326 requires a documented, validated, governance-approved model with back-testing per SR 11-7 and SAB Topic 119. NOT appropriate for loans, debt securities, AFS/HTM securities, or longer-duration instruments — those require DCF, vintage analysis, PD/LGD/EAD, or migration matrix approaches. ASU 2025-05 practical expedient is available to private companies and NFP — public business entities cannot use it. For hands-on support on CECL methodology and documentation: rohit@unfoldingvalues.com.
What this tool does NOT do:
DCF approach (required for instruments with significant prepayment / extension optionality)
Vintage analysis for loan portfolios with similar origination periods
PD × LGD × EAD modeling for banks
Migration matrix approach for graded portfolios
Off-balance-sheet credit exposures (unfunded commitments) under ASC 326-20-30-11