Grant Thornton US has created a white paper to
help institutions understand the accounting challenges behind
acquiring failed banks.

Grant Thornton said the number of failed banks
has increased drastically in recent years, leading to more
acquisitions.

The white paper, Accounting for
FDIC–assisted transactions: Acquisition of loans, application of
ASC 310-30 and other issues, was prepared due to the complex
nature of the associated accounting rules.

It tackles topics including:

  • Applying GAAP purchase accounting to the acquisition of
    loans;  
  • Accounting for loans purchased with deteriorated credit
    quality;
  • The intricacies and complexities on the application of ASC
    310-30, a US accounting standard that provides guidance on certain
    acquired loans;
  • Changes in cash flow estimates; and
  • Pooling of certain acquired loans.

The white paper is a follow-up to Grant
Thornton’s Troubled Bank Opportunities and offers a closer
examination into the technical accounting aspects of failed bank
acquisitions.