New accounting pronouncements

3 Months Ended

Mar. 31, 2023

New Accounting Pronouncements and Changes in Accounting Principles

New Accounting Pronouncements

Note 3 - New accounting pronouncements

Recently Adopted Accounting Standards Updates

Standard

Description

Date of adoption

Effect on the financial statements 

FASB ASU 2022-05,

Financial Services -

Insurance (Topic 944)

Transition for Sold

Contracts

The FASB issued ASU 2022-05 in

December 2022, which allows an insurance

entity to make an accounting policy election

of applying the Long-Duration Contracts

(LDTI) transition guidance on a transaction-

by-transaction basis if the contracts have

been derecognized because of a sale or

disposal and the insurance entity has no

significant continuing involvement with the

derecognized contract.

January 1, 2023

The Corporation was not impacted by

the adoption of ASU 2022-05 during

the first quarter of 2023 since it does

not hold Long-Duration Contracts

(LDTI).

FASB ASU 2022-04,

Liabilities—Supplier

Finance Programs

(Subtopic 405-50)

Disclosure of Supplier

Finance Program

Obligations

The FASB issued ASU 2022-04 in

September 2022, which requires to disclose

information about the use of supplier

finance programs in connection with the

purchase of goods and services.

January 1, 2023

The Corporation was not impacted by

the adoption of ASU 2022-04 during

the first quarter of 2023 since it does

not use supplier finance programs.

FASB ASU 2022-02,

Financial Instruments—

Credit Losses (Topic 326)

Troubled Debt

Restructurings and

Vintage Disclosures

The FASB issued ASU 2022-02 in March

2022, which eliminates the accounting

guidance for troubled debt restructurings

(“TDRs”) in Subtopic 310-40 Receivables—

Troubled Debt Restructurings by Creditors

and requires creditors to apply the loan

refinancing and restructuring guidance to

determine whether a modification results in

a new loan or a continuation of an existing

loan. In addition, the ASU enhances the

disclosure requirements for certain loan

refinancing and restructurings by creditors

when a borrower is experiencing financial

difficulty and enhances the vintage

disclosure by requiring the disclosure of

current-period gross write-offs by year of

origination for financing receivables and net

investments in leases. 

January 1, 2023

The Corporation adopted ASU 2022-02

during the first quarter of 2023. The

adoption of this standard resulted in

enhanced disclosure for loans modified

to borrowers with financial difficulties

and the disclosure of period gross

charge offs by vintage year. The

Corporation anticipates that there will

be loans subject to disclosure under

the new standard that did not qualify

under the prior guidance given the

removal of the concession requirement

for such disclosures. The amended

guidance eliminated the requirement to

measure the effect of the concession

from a loan modification, for which the

Corporation used a discounted cash

flow (“DCF”) model. The impact of

discontinuing the use of the DCF model

to measure the concession resulted in

a release of the allowance for credit

losses ("ACL") of $

46

 million, mainly

related to mortgage loans for which

modifications mostly included a

reduction in contractual interest rates

and given the extended maturity term

of these loans, this resulted in an

increase in the ACL in the period of

modification. For the transition method

related to the recognition and

measurement of TDRs, the Corporation

has elected to apply the modified

retrospective approach for the adoption

of this standard. Accordingly, this

presented an adjustment increase of

$

29

 million, net of tax effect, to the

beginning balance of retained earnings

on January 1, 2023.

Recently Adopted Accounting Standards Updates

Standard

Description

Date of adoption

Effect on the financial statements 

FASB ASU 2022-01,

Derivatives and Hedging

(Topic 815) – Fair Value

Hedging—Portfolio Layer

Method

The FASB issued ASU 2022-01 in March

2022, which amends ASC Topic 815 by

allowing non prepayable financial assets

also to be included in a closed portfolio

hedged using the portfolio layer method.

This amendment permits an entity to apply

fair value hedging to a stated amount of a

closed portfolio of prepayable and non-

prepayable financial assets without

considering prepayment risk or credit risk

when measuring those assets.

January 1, 2023

The Corporation was not impacted by

the adoption of ASU 2022-01 during the

first quarter of 2023 since it does not

hold derivatives designated as fair

value hedges.

FASB ASU 2021-08,

Business Combinations

(Topic 805) – Accounting

for Contract Assets and

Contract Liabilities from

Contracts with Customers

The FASB issued ASU 2021-08 in October

2021, which amends ASC Topic 805 by

requiring contract assets and contract

liabilities arising from revenue contract with

customers to be recognized in accordance

with ASC Topic 606 on the acquisition date

instead of fair value.

January 1, 2023

The Corporation was not impacted by

the adoption of ASU 2021-08 during the

first quarter of 2023, however, it will

consider this guidance for revenue

contracts with customers recognized as

part of business combinations entered

into on or after the effective date.

Accounting Standards Updates Not Yet Adopted

Standard

Description

Date of adoption

Effect on the financial statements 

FASB ASU 2023-02,

Investments—Equity

Method and Joint

Ventures (Topic 323) -

Accounting for

Investments in Tax Credit

Structures Using the

Proportional Amortization

Method

The FASB issued ASU 2023-02 in March

2023, which amend topic ASC 323 by

permitting the election to apply the

proportional amortization method to account

for tax equity investments that generate

income tax credits through investment in

low-income-housing tax credit (LIHTC)

structures and other tax credit programs if

certain conditions are met. The ASU also

eliminates the application of the subtopic

323-740 to LIHTC investment not

accounted for using the proportional

amortization method and instead requires

the use of other guidance.

January 1, 2024

The Corporation is currently evaluating

the impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

FASB ASU 2023-01,

Leases (Topic 842),

Lessors – Common

Control Arrangements

The FASB issued ASU 2023-01 in March

2023, which amends ASC Topic 842 and

requires to amortize leasehold

improvements associated with common

control leases over the useful life of the

leasehold improvements to the common

control group as long as the lessee controls

the use of the underlying assets through a

lease. In addition, the ASU requires

companies to account for leasehold

improvements associated with common

control leases as a transfer between entities

under common control through an

adjustments to equity if, and when, the

lessee no longer controls the use of the

underlying asset.

January 1, 2024

The Corporation is currently evaluating

the impact that the adoption of this

guidance will have on its financial

statements and presentation and

disclosures.

For other recently issued Accounting Standards Updates not yet effective, refer to Note 3 to the Consolidated Financial Statements

included in the 2022 Form 10-K.