Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles

CHAPTER 8

TRANSFERS AND SERVICING OF FINANCIAL ASSETS

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Transfers of Financial Assets under ASC 860—Overview

Scope

Surrender of control

Maintaining effective control

Components of financial assets

Accounting for transfers

Measuring assets and liabilities after completion of a transfer

Transfers of receivables with recourse

Retained interests

Servicing

Changes resulting in transferor regaining control of financial assets sold

Sales-type and direct financing lease receivables

Securitizations

Repurchase agreements

Securities lending transactions

Accounting for collateral

Disclosures

ASC 860 disclosures

PERSPECTIVE AND ISSUES

This chapter discusses the standards in Accounting Standards Codification (ASC) 860, Transfers and Servicing. ASC 860 describes the proper accounting for sales of financial assets to third parties and the use of financial assets as collateral in secured borrowings. This chapter also includes ASC 860’s standards for repurchase agreements and securities lending. Although those two types of transfers usually involve investments, they are discussed in this chapter because the same underlying theory—the financial components approach—is used for those transactions as is used for transfers involving receivables. ASC 860’s standards for extinguishment of debt are set forth in Chapter 20.

Major Topics and Subtopics in the Financial Accounting Standards Board (FASB) Accounting Standards Codification ...