Follow Us

Follow us on Twitter  Follow us on LinkedIn
 
Home>Aladdin's Cave - Archives>International Accounting Standards
Print Page Save to My Library <Next Article  Previous Article>
29 April 2011

FASB improved repurchase agreements reporting


The FASB published Accounting Standards Update (ASU) No. 2011-03, 'Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements'.

The Update is intended to improve financial reporting of repurchase agreements (“repos”) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.

“The Board revisited its standards on transfers and servicing to respond to concerns from financial statement users who felt the criteria for determining effective control for such transactions should be improved,” stated FASB Chairman, Leslie F. Seidman. “The new guidance improves transparency by eliminating consideration of the transferor’s ability to fulfil its contractual rights and obligations from the criteria in determining effective control.”

In a typical repo transaction, an entity transfers financial assets to a counterparty in exchange for cash, with an agreement for the counterparty to return the same or equivalent financial assets for a fixed price in the future. Topic 860, Transfers and Servicing, prescribes when an entity may or may not recognise a sale upon the transfer of financial assets subject to repo agreements. That determination is based, in part, on whether the entity has maintained effective control over the transferred financial assets.

The amendments in this Update are intended to improve the accounting for these transactions by removing from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets, as well as implementation guidance related to that criterion.

Press release


© FASB

< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information


Add new comment





 


www.grahambishop.com
// Business Applications by Denaploy 		Web Master Information
Terms & Conditions
Privacy Policy