Asc 860

In: Business and Management

Submitted By cokezerogirl
Words 4850
Pages 20
860 Transfers and Servicing 10 Overall 15 Scope and Scope Exceptions |

> Overall Guidance
15-1 The Scope Section of the Overall Subtopic establishes the pervasive scope for all Subtopics of the Transfers and Servicing Topic. Unless explicitly addressed within specific Subtopics, the following scope guidance applies to all Subtopics of the Transfers and Servicing Topic, with the exception of Subtopic 860-50, which has its own discrete scope.

> Entities
15-2 The guidance in the Transfers and Servicing Topic applies to all entities.

> Transactions
15-3 The guidance in the Transfers and Servicing Topic applies to the issues of accounting for transfers and servicing of financial assets.
15-4 The guidance in this Topic does not apply to the following transactions and activities: * a. Except for transfers of servicing assets (see Section 860-50-40) and for the transfers noted in the following paragraph, transfers of nonfinancial assets * b. Transfers of unrecognized financial assets, for example, minimum lease payments to be received under operating leases * c. Transfers of custody of financial assets for safekeeping * d. Contributions (for guidance on accounting for contributions, see Subtopic 958-605) * e. Transfers of ownership interests that are in substance sales of real estate (For guidance related to transfers of investments that are in substance a sale of real estate, see Topics 845 and 976. For guidance related to sale-leaseback transactions involving real estate, including real estate with equipment, such as manufacturing facilities, power plants, and office buildings with furniture and fixtures, see Subtopic 840-40.) * f. Investments by owners or distributions to owners of a business entity * g. Employee benefits subject to the provisions of Topic 712…...

Similar Documents

Go with the Flow Inc. Case

...on account. This memo will analyze each transaction under Financial Account Standards Board’s (FASB) Accounting Standards Codification (ASC) 230, Statement of Cash Flows. This memo will also appropriately classify each transaction and discuss any timing issues related to the Statement of Cash Flows. Insurance Settlement Proceeds Issue What is the proper classification for the statement of cash flows related to insurance proceeds? Analysis A tornado destroyed one of the company’s manufacturing facilities, in turn; Go With the Flow received a $20 million settlement from an insurance carrier in the current year. The company decided not to rebuild the facility, instead, they will use the insurance proceeds to fund a defined-benefit pension plan. According to ASC 230-10-45-12, directly related insurance proceeds on a damaged or destroyed building is an investing activity for the statement of cash flows. These insurance proceeds are not financing activities because according to ASC 230-10-45-14, financing activities come from debt instruments such as notes and bonds, or long and short-term borrowing. Insurance proceeds are the result of a settlement, not issuing debt or borrowing. The proceeds are not operating activities because according to ASC 230-10-45-16, operating activities are cash receipts from goods or services. ASC 230-10-45-16 part c. also says that insurance proceeds can be part of operating activities except those directly related to investing......

Words: 1297 - Pages: 6

Asc 410

...ASC 410 Summary ASC 410 is the accounting standard codification that represents asset retirement and environmental obligations. Under ASC 410, there are two main subtopics which are asset retirement obligations and environmental obligations. Asset retirement obligations are legal obligations that may exist in connection with an entity’s retirement of a tangible long-lived asset. These legal obligations may arise when the entity acquires, constructs, or develops a long-lived asset, or operates a long-lived asset under normal conditions. However, it does not occur solely from an entity’s plan to dispose of a long-lived asset. Environmental obligations are environmental remediation liabilities that relate to pollution arising from a prior act, generally as a result of the provisions of laws and regulations. In ASC 410-20, the subtopic is asset retirement obligations. Recognition of a liability for an asset retirement obligation shall occur in the period in which the entity incurs the obligation provided the entity can make a reasonable estimate of the fair value of the obligation. Due to the unique nature of these liabilities, an expected present value technique will usually be the only appropriate technique by which to estimate the fair value of an asset retirement obligation. This method requires a credit-adjusted, risk-free rate to be used to present value the expected cash flows. Adjustments for default risk shall be reflected in the discount rate rather than in the......

Words: 555 - Pages: 3

Mrs. Deng

...receivables at the time of the sale. The following are examples of the application of effective control principles for sale accounting: ASC 860-10-55-31: Judgment is necessary to determine whether a requirement to obtain the transferor’s permission to sell or exchange should preclude sale accounting. For example, in certain loan participation agreements involving transfers of participating interests, the transferor is required to approve any subsequent transfers or pledges of the interests in the loans held by the transferee. Whether that requirement would be a constraint that would prevent the transferee from taking advantage of its right to pledge or to exchange the transferred financial asset and, therefore, accounting for the transfer as a sale, depends on the nature of the requirement for approval. ASC 860-10-55-42: In a loan participation, the lead bank (that is also the transferor) allows the participating bank to resell but reserves the right to call at any time from whoever holds it and can enforce the call option without providing a fair value for the financial asset; such a call option precludes sale accounting. It can be hard to determine fair value if the financial asset is not a readily marketable asset and the true value of the account sold is not known (I.E. Accounts receivable) I would suggest UpBeat refer to the ASC sections listed above to properly determine if the sale precludes sales accounting or not. If the benefit Indeed does not transfer to the......

Words: 1769 - Pages: 8

1. Explain Why the Arrangement Can Be Said to Provide Funding for a Product in the R&D Phase (X) and Should Be Accounted for Under Asc730-20 (Statement 68), but Not Asc 470-10-25-1 Through 25-2 (Issue 88-18). 2. Explain

...drug. * If at any time the project is scrapped the amount received by Pharmagen is non-refundable. * After completion of drug X the PEI will receive future royalties based on the sales of the new product, and they will also receive royalties on an existing Pharmagen drug for a defined period of time. * Pharmagen will retain all intellectual property rights and there are no other agreements between the two parties. Based on this fact pattern I would argue that treatment related to ASC 730-20 is applicable. With regard to this accounting standard for research and development, the issue now lies with whether the funding is a liability to repay the PEI or an obligation to perform contractual services. In order to prove that a liability does not exist there must be a transfer of risk from Pharmagen to the PEI that is substantive and genuine (ASC 730-20-25-4). To determine whether risk has been transferred and several factors must be taken into consideration. ASC 730-20-25-6 gives four conditions that lead to the presumption that Pharmagen will repay, and thus creating a liability. Based on the fact pattern given in the case, none of these situations relate to Pharmagen. They have entered into an agreement with an unrelated......

Words: 335 - Pages: 2

Asc Financing Trends

...ASC Financing and Loans Trends and Challenges: Q&A With Anthony Mai of Sun Healthcare Finance By Rob Kurtz April 09, 2010 Anthony Mai is senior vice president of Sun Healthcare Finance, which offers a full financing solutions and related advisory services to companies across the healthcare industry, including ASCs. Q: What are some of the trends you are seeing in the types of projects ASCs are seeking loans for? What types of loans are they receiving? Anthony Mai: I am seeing still a lot of request for start-up financing. I am also seeing request for acquisition financing in which a hospital sells its ASC to a newly formed LLC consisting of the hospital and physicians. The loans that they usually receive are full payout loans with terms ranging from 5-7 percent. Q: What is the critical information ASCs need to present to banks to ensure the best loan possible? AM: If the bank really understands ASCs, the most important piece of information is the physician production. What I mean is the specialty, number of cases they intend to bring to the center, the reimbursement for those cases. Second would be the proforma, which would spell out the expenses and expected profit (or loss) in the first year. Third would be the financial condition of the physicians in the group Q: After an ASC has identified the bank it wants to secure the loan from, what should be the first few steps to start and move the process along effectively? AM: The more complete package you can give them, the......

Words: 439 - Pages: 2

Asc Overview

...On September 15, 2009, the Accounting Standards Codification (ASC) became effective causing all previous GAAP literature to become nonauthoritative. The ASC was constructed to simplify and reduce the time required to perform accounting research. It is accessible to subscribers at https// and provides a one stop shop for authoritative GAAP related material. It was many years in the making and made possible by contributions from hundreds of accounting professionals working towards the main goal of streamlining accounting research. Below you will find information about what the Codification is, its goals and purpose, and how affected parties will benefit. Ultimately, after reviewing this information you will gain insight into main topic areas and a better overall understanding of the Codification. First, what is the Accounting Standards Codification (ASC)? The ASC, cited as the FASB Accounting Standards Codification® (Codification), is a subscriber based website which provides useful tools for researching authoritative GAAP related material. It was made authoritative by SFAS 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles. The intent is to make available an up to date research system that makes researching accounting standards easy and efficient. The website database offers a tutorial for researching standards, as well as many additional features such as auto population of related topics to assist......

Words: 1307 - Pages: 6

Deloitte Trueblood Case Drug King 4-8

...determine whether each of these asset transfers may be classified as a sale under GAAP, and specifically under ASC 860, Transfers and Servicing: Overall. Statement of Research Problem 1. Can the transfer of the publicly traded Series A preferred stock with a freestanding call option be accounted for as a sale under GAAP? 2. Can the transfer of the non-publicly traded Series B preferred stock with an attached call option be accounted for as a sale under GAAP? 3. Can the transfer of the publicly traded debt security with an attached conditional call option be accounted for as a sale under GAAP? 4. Can the transfer of the non-publicly traded trade receivables with a put option be accounted for as a sale under GAAP? 5. Can the transfer of the non-publicly traded credit card receivables with an in-the-money put option be accounted for as a sale under GAAP? PLAUSIBLE ALTERNATIVES Each of the five questions above has two plausible alternatives: 1. The transfer can be accounted for as a sale. 2. The transfer cannot be accounted for as a sale and should be accounted for as a secured borrowing. Proposed Solution Based on the guidance provided by ASC 860: Transfers and Servicing, only the transfer of the non-publicly traded trade receivables (question 4 above) can be accounted for as a sale because this transfer meets all conditions of a sale specified in paragraph 860-10-40-5. The remaining transfers should be accounted for as secured borrowings because they fail......

Words: 3358 - Pages: 14

Asc Guidance

...Memo To:        Chris Eastus From:    Francis Bennett Date:     June 22, 2014 Re:        Optimization of Production under Bistide Constraint __________________________________________________________________ Recommendation The purpose of this memo is to provide managerial guidance as to the ideal production schedule under current and anticipated Bistide supply. I will make three recommendation for the optimal production level to maximize operating income for: A) Current Bistide levels of 5000 pounds per month; B) Increased supply of 6000 pounds of Bistide per month; C) Increased supply with production constraints. * Scenario A) I recommend producing 200 A1, 200 B2, and 800 C3. * Scenario B), I recommend production increases to: 200 A1, 200 B2, and 1133 C3; and the maximum allowance for the additional resources should be $10,000, or $10.00 per pound. * Scenario C) I recommend producing 250 A1, 200 B2, and 1000 C3; allowing no more than $8,800 for the additional resources, or $8.80 per pound. Scenario A Under Scenario A, minimum production levels for each product are set at 200 units, and the maximum supply of the constrained resource Bistide are 5000 pounds monthly. Producing the most product possible with the highest contribution margin per pound of constrained resource would result in a product mix of 200 A1s, 200 B2s, and 800 C3s. This production schedule will yield an operating income of $16,000 monthly, or $192,000......

Words: 542 - Pages: 3


...of our Financial Reporting Developments publication on accounting for transfers and servicing of financial assets. This publication has been updated for further clarification and enhancements to our interpretative guidance. Applying ASC 860 in practice continues to be challenging. ASC 860’s scope is wide and applies to more than just securitizations. Moreover, ASC 860 relies in part on legal interpretations to determine the accounting for the transfer. Additionally, a transferor’s continuing involvement — which can vary significantly from transaction to transaction — will also affect the accounting analysis, requiring a complete understanding of both the business purpose and the form of the transaction. The authoritative literature on accounting for transfers of financial assets continues to change. The FASB is currently finalizing a project that would amend the accounting for repurchase-to-maturity transactions and repurchase financings and require new disclosures for certain transfers accounted for as sales and secured borrowings. In addition, the AICPA is updating its guidance on the use of legal interpretations as evidential matter to support management’s assertion that a transfer of financial assets has met the isolation criterion in ASC 860. This publication includes excerpts from and references to the FASB’s Accounting Standards Codification, interpretive guidance and examples. Practice continues to develop and additional authoritative guidance in this area could be......

Words: 127721 - Pages: 511

Asc 815

...Discuss whether the following meet the definition of a derivative under ASC 815 Consider the definition of derivative first. Notional Underlying No initial net investment Net Settle 1. A contract to purchase 100 common shares of a publicly traded corporation, at a price of $10 per share on 6/30/2012. No. it is a regular way trade security. 2. A contract to sell EUR 1MM for USD 1.3MM on 6/30/2012 No net settle; 3. A contract that pays the difference between 5% (fixed interest rate) and 6-month USD LIBOR interest rate (as observed in the market on 6/30/2002) on a notional amount of USD 10MM 4. A contract to purchase as many silver bars as needed at $10,000/each to be invoiced and paid quarterly over a one year period. Assume no minimum or maximum purchase requirements, nor the existence of any default provisions. No notional. 5. A contract to exchange the difference between a fixed price of $100/barrel Brent crude and the NYMEX Brent spot price quarterly over the next 3 years on a notional of 25 barrels. Yes. Notional: barrel; Underlying: Brent crude and NYMEX Brent; No initial investment; can be net settled. You have provided the following by your clients who is not sure what the appropriate accounting is. Please provide them your guidance which comports with ASC 815. You should also comment on any provisions that could be changed which will change the ASC 815 classification. A manufacturing company has agreed to terms on a major......

Words: 512 - Pages: 3


...the provision would preclude sales accounting. Alternative 1 — Fail sale accounting criteria because of Transfer Provision 1. ASC 860-10-40-5(b) requires that the bank have the right to pledge or exchange the accounts receivable it received and that no condition both “constrains [the bank] from taking advantage of its right to pledge or exchange [the receivables and] provides more than a trivial benefit” to UpBeat Inc. Transfer Provision 1 (outlined in the case document) indicates that the bank is constrained because it has to obtain permission from UpBeat if it decides to sell or pledge the receivables. This constraint would preclude achievement of the sale criteria under ASC 860-10-40-5(b). Alternative 2 — Fail sale accounting criteria because of Transfer Provision 2. ASC 860-10-40-5(b) requires that the bank have the right to pledge or exchange the accounts receivable it receives and that no condition both constrains the bank “from taking advantage of its right to pledge or exchange [the receivables and] provides more than a trivial benefit” to UpBeat. Because similar accounts receivable are not readily available in the marketplace, the transferee is constrained. The transferee cannot sell the accounts receivable because they would not be available for delivery to the transferor if the transferor were to exercise its call. ASC 860-10-40-5(c) requires as a condition for sale accounting that UpBeat not maintain effective control over the transferred accounts......

Words: 823 - Pages: 4

From Beijing Jeep to Asc Fine Wines: the Story of an American Family Business in China

...the  sales  of  Beijing  Jeep  began  to  fall  and  the  company  cannot sustain its business.    Beijing  Jeep  had  grown  with  the   dependence  of  the  Chinese  government  and  having   this  support,  they  did  not  focus  on  other  strategies  or  roles  as  products  design,  customer  satisfaction,  opening  new  markets,  distribution   channels,  penetration  of  new  targets  and  competition in the current market.   Since  Beijing  has  only  been  successful  under  the  supervision  of  the  government  and  is  not  able  to  succeed  with  their  own  resources,  we  can  conclude  that  Beijing  Jeep  itself  is  not  a  success.   2. What negotiation tactics did AMC use with the Chinese government? And ASC? ASC  faces  new  challenges  as  an  American company operating in China and  this goes hand in   hand  with  reforming  some  of  the  Jeep  models.  The  Cherokee  Jeep  is  an  example,  a   model  already existing in the United States  in need for reformat. Since the model is already known in  the  United  States  it  is  more  convenient  and  time  saving  to  import  some  materials  instead  of  conducting  a  redesign  in  China.  This   is  where  the  government  stands  in  their  way.  The  Chinese government does not accept export of hard currency, which is necessary to import the  products.  To  overcome  this  problem  AMC  had  to  use  negotiation  tactics  to  get  the  Chinese  government  on  their  side.  ......

Words: 1238 - Pages: 5

Case 9-6 Upbeat Inc

...Case 9-6 UpBeat Inc.\ Transfer provision 1 only states that bank requires UpBeat’s approval to sell or pledge the accounts receivables to third parties, but doesn’t specify the detailed requirements. Therefore, according to ASC 860-10-55-31, we cannot simply determine whether the requirements would constraint bank from taking advantage of sale or pledge the transferred account receivables and preclude sale accounting of UpBeat. Provision 2 mentions UpBeat can exercise a call option to redeem its account receivables when it meets certain revenue amount. According to ASC 860-10-55-42, an option will precludes sale accounting when the transferred asset is purchased back at fair value and the transferor doesn’t hold a residual beneficial interest. However, the agreement between bank and UpBeat shows the repurchase price is fixed; therefore, the provision 2 doesn’t preclude sale accounting. In addition, if the provisions precludes the sale accounting are removed, the sale accounting would be appropriate after the initial transfer. 860-10-55-31: Judgment is necessary to determine whether a requirement to obtain the transferor’s permission to sell or exchange should preclude sale accounting. For example, in certain loan participation agreements involving transfers of participating interests, the transferor is required to approve any subsequent transfers or pledges of the interests in the loans held by the transferee. Whether that requirement would be a constraint that would......

Words: 773 - Pages: 4

Fasb Asc

...a. Macroeconomic conditions such as a deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets b. Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics (consider in both absolute terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political development c. Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows d. Overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods e. Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation f. Events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit g. If applicable,...

Words: 250 - Pages: 1


...JAD TWICE PRINT MEDIA DEALER 6162 Einthoven St., Palanan, Makati City Contanct No. 5363995 Pasay – PIO (Pasay City Hall) Date: June 30, 2012 RE: Newspaper Billing (June 1 – 30 2012) Particular Amount Inquirer (Mon-Fri) 2 40x18 = 720.00 Inquirer (Sat-/Holiday 1 6x18 = 108.00 Inquirer (Sunday) 1 4x20 = 80.00 Bulletin (Mon-Sat) 1 26x18 = 468.00 Bulletin (Sunday) 1 4x20 = 80.00 Star (Mon-Sun) 1 30x20 = 600.00 Mla. Standard (Mon-Sat) 1 26x18 = 468.00 Mla. Times (Mon-Sun) 1 30x18 = 540.00 Mla. Tribune (Mon-Sun) 1 30x18 = 540.00 Malaya (Mon-Fri) 1 21x25 = 525.00 Buss.World (Mon-Fri) 1 21x25 = 525.00 Buss.Mirror (Mon-Sun) 1 25x25 = 625.00 Assorted tabloids : 13 pcs/ day x30 = 390 = 3,900.00 Total P 9,179.00 Prepared by: Abner Trinidad JAD TWICE PRINT MEDIA DEALER 6162 Einthoven St., Palanan, Makati City Contanct No. 5363995 Stratworks Date: June 30, 2012 RE: Newspaper Billing (June 1 – 30......

Words: 726 - Pages: 3