Under the Current Expected Credit Loss (CECL) model, an entity should present financial assets measured at amortized cost on its balance sheet with an allowance for credit losses. The initial estimate of expected credit losses is not recognized through net income but is recorded as an adjustment to the amortized cost basis of the related financial asset, resulting in a balance sheet gross-up (ASC 326-20-35-11). This means that the entity will have an increased carrying amount on the balance sheet to reflect the lifetime expected credit losses.

At each reporting date, the entity should reassess its estimate of credit losses and adjust the allowance as necessary (ASC 326-20-35-25). If the financial assets have similar risk characteristics, they can be grouped for the purpose of estimating expected credit losses. However, if the risk characteristics are not similar, expected credit losses should be calculated individually, ensuring that any risk of loss is incorporated based on internal or external expected loss assumptions for groups of similar assets (ASC 326-20-35-27).

It's important to note that if an asset is collateral-dependent and qualifies for a practical expedient, the entity may use simplified methods for estimating credit losses. But if the asset no longer qualifies, the entity must reassess and estimate credit losses using another appropriate technique (ASC 326-20-35-33).