2.1 Scope and Scope Exceptions
2.1.1 General
ASC 860-10
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.
15-5
Paragraph 815-10-40-2 states that transfers of assets
that are derivative instruments and subject to the
requirements of Subtopic 815-10 but that are not
financial assets shall be accounted for by analogy to
this Topic.
The guidance in ASC 860 applies to all entities. ASC 860 contains four subtopics:
-
ASC 860-10, which addresses the transferor’s and transferee’s accounting for transfers of recognized financial assets as sales or secured borrowings and disclosures (see Chapter 3).
-
ASC 860-20, which provides guidance on accounting for sales of financial assets by the transferor and transferee, accounting when a transferor regains control of financial assets previously sold, and disclosures (see Chapter 4).
-
ASC 860-30, which covers accounting for secured borrowings by the transferor and transferee and disclosures (see Chapter 5).
-
ASC 860-50, which addresses accounting for servicing of financial assets, including transfers of servicing assets, and disclosures (see Chapter 6).
For a transaction to be within the scope of ASC 860-10, it must (1) involve a
recognized financial asset or a recognized nonfinancial derivative asset, (2)
represent a transfer, and (3) not be subject to an exception in ASC 860-10. The
SEC staff has generally objected to the application of ASC 860-10’s
derecognition guidance to transactions not within the scope of ASC 860-10.
2.1.2 The Asset
ASC 860-10 — Glossary
Financial Asset
Cash, evidence of an ownership interest in an entity, or a
contract that conveys to one entity a right to do either of
the following:
- Receive cash or another financial instrument from a second entity
- Exchange other financial instruments on potentially favorable terms with the second entity.
Financial assets include the following:
- Loans receivable.
- Loan participations.
- ADC arrangements that are treated as loans receivable.
- Trade and other accounts receivable.
- Notes receivable.
- Debt securities, whether marketable or nonmarketable.
- Equity securities, including equity method investments, whether marketable or nonmarketable.
- Options or forward contracts to purchase or sell debt or equity securities.
- Beneficial interests in securitized assets (whether the securitized assets are financial or nonfinancial assets).
- Negotiable instruments, such as certificates of deposit and banker’s acceptances.
- Certain insurance contracts.
- Sales-type and direct financing lease receivables.1
Sections 2.2 through 2.5 include additional discussion of
whether specific assets are within the scope of ASC 860-10.
2.1.3 Application of the Term “Transfer”
ASC 860-10 — Glossary
Transfer
The conveyance of a noncash financial asset by and to someone
other than the issuer of that financial asset.
A transfer includes the following:
- Selling a receivable
- Putting a receivable into a securitization trust
- Posting a receivable as collateral.
A transfer excludes the following:
- The origination of a receivable
- Settlement of a receivable
- The restructuring of a receivable into a security in a troubled debt restructuring.
ASC 860-10-20 indicates that the scope of the term “transfer” includes selling a
financial asset, putting a financial asset into a securitization trust, or posting a
financial asset as collateral. The origination or settlement of a receivable, or the
“restructuring of a receivable into a security in a troubled debt restructuring,” is
outside the scope of this definition. Sections 2.3 and
2.5.2 include additional discussion of whether certain
transactions represent transfers under ASC 860-10.
2.1.4 Transfers Not Subject to ASC 860-10
ASC 860-10
15-4 The guidance in this Topic
does not apply to the following transactions and
activities:
- Except for transfers of servicing assets (see Section 860-50-40) and for the transfers noted in the following paragraph, transfers of nonfinancial assets
- Transfers of unrecognized financial assets, for example, lease payments to be received under operating leases
- Transfers of custody of financial assets for safekeeping
- Contributions (for guidance on accounting for contributions, see Subtopic 958-605)
- Transfers of in substance nonfinancial assets, see Subtopic 610-20
- Investments by owners or distributions to owners of a business entity
- Employee benefits subject to the provisions of Topic 712
- Leveraged leases subject to Topic 842
- Money-over-money and wrap lease transactions involving nonrecourse debt subject to Topic 842.
ASC 860-10-15-4 lists transfers of financial assets that the scope
of ASC 860-10 does not include. The sale accounting guidance in ASC 860-10 should
not be applied by analogy to transfers of assets that are not within the scope of
ASC 860-10. Instead, an entity should look to other applicable U.S. GAAP for
guidance on such transfers. Sections 2.4 and 2.5.3 include additional discussion of certain transfers of
financial assets that are not within the scope of ASC 860-10.
Footnotes
1
See Section 2.2.3.5 for
discussion of certain components of sales-type and direct financing
lease that represent nonfinancial assets.