Deloitte
Accounting Research Tool
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On the Radar

Transfers and Servicing of Financial Assets

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On the Radar
Transfers and Servicing of Financial Assets

Determining whether a transfer of financial assets or servicing rights qualifies as a sale for financial reporting purposes can be time-consuming and complex. An entity must consider both the form and substance of the transfer. As part of such an analysis, the entity would evaluate relevant legal and accounting rules and interpretations and may need to consult legal experts. The outcome of this analysis could significantly affect the classification, measurement, and earnings impact of the transaction as well as the related financial statement ratios. This guidance has not significantly changed for more than a decade, and no changes are expected in the near term. However, in response to stakeholder feedback, the FASB included transfers and servicing of financial assets in its recently released invitation to comment on its agenda consultation.

Footnotes

1
Transfers of derivative assets, including nonfinancial derivative assets subject to ASC 815, are accounted for under ASC 860 and are thus subject to the steps outlined in the decision tree below. See ASC 815-10-40-2 and 40-3 for further details.
2
See Section 5.3.3.3. In a securities lending arrangement in which securities are loaned for noncash collateral (e.g., a securities-for-securities transaction) and the securities lender has the right to transfer the collateral received (i.e., the securities lender can sell or repledge the collateral obtained), both the lender and the borrower will recognize the collateral.