Detailed Answer
(d) Since many of Kline Bank’s debtors have high debtto-
equity ratios, this group of debtors has a similar economic
characteristic, and thus, would be considered a concentration of
credit risk to Kline Bank. The entity must disclose the following
information regarding concentrations of credit risk:
1. Information about the shared activity, region, or economic
characteristic of the group.
2. Amount of accounting loss that the entity would incur
as a result of the concentrated parties’ failure to perform
according to the terms of the contracts.
3. Information regarding entity’s policy of requiring collateral.