CECL — current expected credit losses — is the accounting standard under which lenders reserve for the lifetime expected credit losses on a loan from the time it is originated, rather than waiting for a loss to become probable. The reserve flows through earnings.
Because CECL front-loads expected losses into the allowance, a problem credit drags earnings before it is ever resolved — part of why removing a classified asset has value beyond the cash.
The prior incurred-loss model reserved only once a loss was probable; CECL requires reserving lifetime expected losses up front, using current conditions and forecasts.
Removing the credit releases the allowance held against it; on a decision to sell, the loan is typically moved to held-for-sale and measured at the lower of cost or fair value. See the accounting overview.
No — general information only; confirm treatment with your own accountants.