20-19 Under Generally Accepted Accounting Principles,FIs have flexible rules in recognizing the amount and timing of loan losses.

Question

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Under GAAP, Financial Institutions (FIs) are allowed to use flexible rules for recognizing the amount and timing of loan losses. This is because FIs may have different types of loans on their books with varying risk levels, making it challenging to have strict accounting rules for all loans. However, FIs are required to disclose their methods and assumptions used for determining loan loss provisions in their financial statements.

20-19 Under Generally Accepted Accounting Principles,FIs Have Flexible Rules in Recognizing