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Chapter 7 — Common Issues Related to Cash Flows

7.10 Classification of Cash Flows for Repurchase Agreements and Reverse Repurchase Agreements

7.10 Classification of Cash Flows for Repurchase Agreements and Reverse Repurchase Agreements

The ASC master glossary defines a “repurchase agreement” and “reverse repurchase agreement,” in part, as follows:
  • Repurchase agreement — An “agreement under which the transferor (repo party) transfers a financial asset to a transferee (repo counterparty or reverse party) in exchange for cash and concurrently agrees to reacquire that financial asset at a future date for an amount equal to the cash exchanged plus or minus a stipulated interest factor.”
  • Reverse repurchase agreement accounted for as a collateralized borrowing — A “transaction that is accounted for as a collateralized lending in which a buyer-lender buys securities with an agreement to resell them to the seller-borrower at a stated price plus interest at a specified date or in specified circumstances.”