ASC

ASC 210-20

Offsetting

210 Balance Sheet

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In brief

IntermediatePresentationDisclosureFinancial instrumentsDerivatives and hedging

ASC 210-20 states the general principle that offsetting assets and liabilities on the balance sheet is improper unless a right of setoff exists, and sets the four conditions for a right of setoff (210-20-45-1): two parties owe each other determinable amounts, the reporting party has the right to set off, intends to set off, and the right is enforceable at law (including in bankruptcy). It also provides a narrow exception permitting (but not requiring) offsetting of payables and receivables under same-counterparty, same-settlement-date repurchase and reverse repurchase agreements accounted for as collateralized borrowings that meet all conditions in 210-20-45-11, and it imposes extensive netting disclosures for derivatives, repos/reverse repos, and securities borrowing/lending subject to enforceable master netting arrangements.

Key points (7)
  • Offsetting is improper unless a right of setoff exists; all four conditions of 210-20-45-1 must be met (mutual determinable amounts owed, right to set off, intent to set off, and enforceability at law), and a debtor with a valid right of setoff may report the net amount (210-20-45-2).
  • Ability to set off is not enough: if the reporting party does not intend to set off, net presentation is not representationally faithful (210-20-45-4); intent is evidenced by management's acknowledgment and, if applicable, demonstrated execution of setoff in similar situations (210-20-45-5).
  • 'Enforceable at law' means the right should be upheld in bankruptcy; offsetting is appropriate only if all available positive and negative evidence gives reasonable assurance the right would be upheld in bankruptcy, considering state law and the U.S. Bankruptcy Code (210-20-45-8 and 45-9).
  • Cash or other assets generally may not be offset against taxes or other amounts owed to governmental bodies, except where the purchase of tax-acceptable government securities is in substance a prepayment of taxes payable in the near future (210-20-45-6 through 45-7).
  • Notwithstanding the intent condition, an entity may elect to offset repo payables against reverse repo receivables accounted for as collateralized borrowings only if all conditions of 210-20-45-11 are met (same counterparty, same explicit settlement date, master netting arrangement, book entry securities, qualifying securities transfer system and banking arrangements, and same settlement account); the election must be applied consistently and net receivables may not be offset against net payables (210-20-45-12).
  • Where maturities differ, only the party with the nearer maturity may offset (210-20-45-3); the general two-party setoff principle is not modified by the specialized offsetting regimes listed in 210-20-15-3 (e.g., 715-30, 715-60, 740-10, 815-10-45-1 through 45-7, 842-50).
  • Entities must disclose, in tabular format separately for assets and liabilities, gross amounts, amounts offset, net amounts presented, amounts subject to an enforceable master netting arrangement not otherwise offset (including financial and cash collateral), and the resulting net amount (210-20-50-3 and 50-4), plus a description of the nature of the rights of setoff (210-20-50-5).

For students. Balance sheet netting materially shrinks reported assets and liabilities for financial institutions, so examiners love the four-part test in 210-20-45-1. The most common mistake is assuming a master netting agreement alone permits offsetting — it does not; you still need intent plus legal enforceability (including in bankruptcy), except for the narrow repo/reverse repo election in 210-20-45-11 and the derivative collateral rules in 815-10-45.

right of setoffoffsettingmaster netting arrangementrepurchase and reverse repurchase agreementsenforceability in bankruptcyintent to set offcash collateralnet presentation in statement of financial position

Machine-generated study aid for ASC 210-20. Check the source paragraphs below.

210-20-00Status

Source downloaded: .Record version 1638ada1f70e. Effective date must be checked in the source.

210-20-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
CashAddedAccounting Standards Update No. 2012-0410/01/2012
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Leveraged LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Repurchase Agreement Accounted for as a Collateralized Borrowing (formerly Repurchase Agreement [2nd def.])AddedAccounting Standards Update No. 2014-0603/14/2014
Repurchase Agreement (2nd def)SupersededAccounting Standards Update No. 2014-0603/14/2014
Reverse Repurchase Agreement Accounted for as a Collateralized Borrowing (formerly Reverse Repurchase Agreement)AddedAccounting Standards Update No. 2014-0603/14/2014
Reverse Repurchase AgreementSupersededAccounting Standards Update No. 2014-0603/14/2014
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
210-20-05-3AmendedAccounting Standards Update No. 2014-0603/14/2014
210-20-15-3AmendedMaintenance Update 2017-21 (PDF)12/22/2017
210-20-15-3AmendedAccounting Standards Update No. 2016-0202/25/2016
210-20-15-3AmendedAccounting Standards Update No. 2013-1107/18/2013
210-20-15-3AmendedAccounting Standards Update No. 2012-0410/01/2012
210-20-45-11AmendedAccounting Standards Update No. 2014-0603/14/2014
210-20-50-1 through 50-5
AmendedAccounting Standards Update No. 2025-1112/08/2025
210-20-50-1AmendedAccounting Standards Update No. 2014-0603/14/2014
210-20-50-1AmendedAccounting Standards Update No. 2013-0101/31/2013
210-20-50-1 through 50-6
AddedAccounting Standards Update No. 2011-1112/16/2011
210-20-50-2AmendedAccounting Standards Update No. 2013-0101/31/2013
210-20-55-1 through 55-22
AddedAccounting Standards Update No. 2011-1112/16/2011
210-20-55-2 through 55-5SupersededAccounting Standards Update No. 2013-0101/31/2013
210-20-55-7AmendedAccounting Standards Update No. 2013-0101/31/2013
210-20-55-10AAddedAccounting Standards Update No. 2013-0101/31/2013
210-20-55-18AAddedAccounting Standards Update No. 2012-0410/01/2012
210-20-55-20 through 55-22
AmendedAccounting Standards Update No. 2013-0101/31/2013
210-20-55-22AmendedAccounting Standards Update No. 2016-1912/14/2016
210-20-60-3AmendedAccounting Standards Update No. 2013-1107/18/2013
210-20-60-3AAddedAccounting Standards Update No. 2012-0410/01/2012
210-20-60-4AmendedAccounting Standards Update No. 2016-0202/25/2016
210-20-60-7AmendedMaintenance Update 2017-21 (PDF)12/22/2017
210-20-65-1AmendedAccounting Standards Update No. 2013-0101/31/2013
210-20-65-1AddedAccounting Standards Update No. 2011-1112/16/2011
210-20-65-2AddedAccounting Standards Update No. 2013-0101/31/2013

210-20-05Overview and Background

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210-20-05-1
This Subtopic provides criteria for offsetting amounts related to certain contracts and provides guidance on presentation. It is a general principle of accounting that the offsetting of assets and liabilities in the balance sheet is improper except if a right of setoff exists.
210-20-05-2
The general principle that the offsetting of assets and liabilities is improper except where a right of setoff exists is usually thought of in the context of unconditional receivables from and payables to another party. That general principle also applies to conditional amounts recognized for contracts under which the amounts to be received or paid or items to be exchanged in the future depend on future interest rates, future exchange rates, future commodity prices, or other factors.

Repurchase and Reverse Repurchase Agreements

210-20-05-3
As defined, repurchase agreements accounted for as collateralized borrowings and reverse repurchase agreements accounted for as collateralized borrowings represent collateralized borrowing and lending transactions. These transactions may involve a master netting agreement between the parties. This Subtopic addresses offsetting for such borrowing and lending transactions.

210-20-15Scope and Scope Exceptions

Source downloaded: .Record version 80eb74e3a5d1. Effective date must be checked in the source.

Entities

210-20-15-1
The guidance in this Subtopic applies to all entities.

Transactions

210-20-15-2
The guidance in this Subtopic does not apply to the following types of transactions and contract arrangements:
  1. a
    The derecognition or nonrecognition of assets and liabilities. Derecognition by sale of an asset or extinguishment of a liability results in removal of a recognized asset or liability and generally results in the recognition of gain or loss. Although conceptually different, offsetting that results in a net amount of zero and derecognition with no gain or loss are indistinguishable in their effects on the statement of financial position. Likewise, not recognizing assets and liabilities of the same amount in financial statements achieves similar reported results.

Other Considerations

210-20-15-3
The general principle of a right of setoff involves only two parties, and exceptions to that general principle shall be limited to practices specifically permitted by the Subtopics listed in this paragraph. Various accounting Subtopics specify accounting treatments in circumstances that result in offsetting or in a presentation in a statement of financial position that is similar to the effect of offsetting. The guidance in this Subtopic does not modify the accounting treatment in the particular circumstances prescribed by any of the following Subtopics:
  1. a
    Subtopic 842-50 (leveraged leases)
  2. b
    Subtopic 715-30 (accounting for pension plan assets and liabilities)
  3. c
    Subtopic 715-60 (accounting for plan assets and liabilities)
  4. d
    Subtopic 740-10 (net tax asset or liability amounts reported)
  5. dd
    Paragraphs
    815-10-45-1 through 45-7
    (derivative instruments with the right to reclaim cash collateral or the obligation to return cash collateral)
  6. e
    Subtopics 940-320 (trade date accounting for trading portfolio positions) and 910-405 (advances received on construction contracts)
  7. f
    Paragraph 942-210-45-3A (reciprocal balances with other banks).

210-20-45Other Presentation Matters

Source downloaded: .Record version 1004ee2ebd55. Effective date must be checked in the source.

Right of Setoff Conditions

210-20-45-1
A right of setoff exists when all of the following conditions are met:
  1. a
    Each of two parties owes the other determinable amounts.
  2. b
    The reporting party has the right to set off the amount owed with the amount owed by the other party.
  3. c
    The reporting party intends to set off.
  4. d
    The right of setoff is enforceable at law.
210-20-45-2
A debtor having a valid right of setoff may offset the related asset and liability and report the net amount.
210-20-45-3
If the parties meet the criteria specified in paragraph 210-20-45-1, specifying currency or interest rate requirements is unnecessary. However, if maturities differ, only the party with the nearer maturity could offset because the party with the longer term maturity must settle in the manner that the other party selects at the earlier maturity date.
210-20-45-4
If a party does not intend to set off even though the ability to set off exists, an offsetting presentation in the statement of financial position is not representationally faithful.
210-20-45-5
Acknowledgment of the intent to set off by the reporting party and, if applicable, demonstration of the execution of the setoff in similar situations meet the criterion of intent.

Offsetting Securities Against Taxes Payable

210-20-45-6
The offset of cash or other assets against the tax liability or other amounts owing to governmental bodies shall not be acceptable except in the circumstances described in the following paragraph.
210-20-45-7
Most securities issued by governments are not by their terms designed specifically for the payment of taxes and, accordingly, shall not be deducted from taxes payable on the balance sheet. The only exception to this general principle occurs when it is clear that a purchase of securities (acceptable for the payment of taxes) is in substance an advance payment of taxes that will be payable in the relatively near future, so that in the special circumstances the purchase is tantamount to the prepayment of taxes. This occurs at times, for example, as an accommodation to a local government and in some instances when governments issue securities that are specifically designated as being acceptable for the payment of taxes of those governments.

Assurance that Right of Setoff Is Enforceable in a Bankruptcy

210-20-45-8
State laws about the right of setoff may provide results different from those normally provided by contract or as a matter of common law. Similarly, the U.S. Bankruptcy Code imposes restrictions on or prohibitions against the right of setoff in bankruptcy under certain circumstances. Legal constraints should be considered to determine whether the right of setoff is enforceable.
210-20-45-9
The phrase enforceable at law encompasses the idea that the right of setoff should be upheld in bankruptcy. The nature of support required for an assertion in financial statements that a right of setoff is enforceable at law is subject to a cost-benefit constraint and depends on facts and circumstances. All of the information that is available, either supporting or questioning enforceability, should be considered. Offsetting is appropriate only if the available evidence, both positive and negative, indicates that there is reasonable assurance that the right of setoff would be upheld in bankruptcy.

Repurchase and Reverse Repurchase Agreements

210-20-45-11
Notwithstanding the condition in paragraph 210-20-45-1(c), an entity may, but is not required to, offset amounts recognized as payables under repurchase agreements accounted for as collateralized borrowings and amounts recognized as receivables under reverse repurchase agreements accounted for as collateralized borrowings if all of the following conditions are met:
  1. a
    The repurchase and reverse repurchase agreements are executed with the same counterparty.
  2. b
    The repurchase and reverse repurchase agreements have the same explicit settlement date specified at the inception of the agreement.
  3. c
    The repurchase and reverse repurchase agreements are executed in accordance with a master netting arrangement.
  4. d
    The securities underlying the repurchase and reverse repurchase agreements exist in book entry form and can be transferred only by means of entries in the records of the transfer system operator or securities custodian. Book entry securities meeting the criterion in this paragraph exist only as items in accounting records maintained by a transfer system operator. This requirement does not preclude offsetting of securities held in book entry form solely because other securities of the same issue exist in other forms.
  5. e
    The repurchase and reverse repurchase agreements will be settled on a securities transfer system that operates in the manner described in paragraphs
    210-20-45-14 through 45-17
    , and the entity must have associated banking arrangements in place as described in those paragraphs. Cash settlements for securities transferred shall be made under established banking arrangements that provide that the entity will need available cash on deposit only for any net amounts that are due at the end of the business day. It must be probable that the associated banking arrangements will provide sufficient daylight overdraft or other intraday credit at the settlement date for each of the parties.     The term probable is used in this Subtopic consistent with its use in paragraph 450-20-25-1 to mean that a transaction or event is likely to occur.
  6. f
    The entity intends to use the same account at the clearing bank or other financial institution at the settlement date in transacting both the cash inflows resulting from the settlement of the reverse repurchase agreement and the cash outflows in settlement of the offsetting repurchase agreement.
210-20-45-12
The entity's choice to offset or not shall be applied consistently. Net receivables resulting from the application of this Subtopic shall not be offset against net payables resulting from the application of this Subtopic in the statement of financial position.
210-20-45-13
Paragraph 210-20-45-11 does not apply to amounts recognized for other types of repurchase and reverse repurchase agreements executed under a master netting arrangement; however, those amounts could otherwise meet the conditions of paragraph 210-20-45-1 for a right of setoff. Therefore, unless all conditions in that paragraph are met, the amount recognized under a repurchase agreement that does not settle in accordance with all the conditions of paragraphs
210-20-45-11 through 45-17
may not be offset against the amount recognized under a reverse repurchase agreement merely because the agreements are executed with the same counterparty under a master netting arrangement. The gross unconditional receivables and payables recognized in the statement of financial position related to those types of repurchase and reverse repurchase agreements provide useful information about the timing and amount of future cash flows that would be lost if those amounts were offset.

Securities Transfer System

210-20-45-14
This guidance describes a securities transfer system for repurchase agreements and reverse repurchase agreements (and associated banking arrangements) that meets the requirements of paragraph 210-20-45-11. In a securities transfer system for repurchase agreements and reverse repurchase agreements that meets the requirements of that paragraph, cash transfers are initiated by notification from the owner of record of the securities to its securities custodian to transfer those securities to the counterparty to the agreement. The securities custodian for a securities transfer system may be the bank or financial institution that executes securities transfers over the securities transfer system, and book entry securities exist only in electronic form on the records of the transfer system operator for each entity that has a security account with the transfer system operator. Book entry securities exist only as items of account on the controlling records of the transfer system operator. Banks or other financial institutions may maintain subsidiary records of book entry securities. Book entry securities may be transferred on the subsidiary records of a bank or financial institution but, for entities that have a security account with the transfer system operator, may be transferred from the account of such an entity only through the transfer system operator.
210-20-45-15
Under associated banking arrangements, each party to a same-day settlement of both a repurchase agreement and a reverse repurchase agreement would be obligated to pay a gross amount of cash for the securities transferred from its counterparty but would be able to reduce that gross obligation by notifying its securities custodian to transfer other securities to that counterparty the same day.
210-20-45-16
Thus, each party is responsible for maintaining available cash on deposit only for the amount of any net payable unless it fails to instruct its securities custodian to transfer securities to its counterparty. Failure by either party to instruct its securities custodian to transfer securities owned of record would result in that party's failing to receive cash from the counterparty and, thereby, would require that party to have available cash on deposit for the gross payable due for securities transferred to it. The failure also shall be an event of default under the master netting arrangement required by paragraph 210-20-45-11. The event of default, in turn, shall entitle the other party to terminate the arrangement and demand the immediate net settlement of all contracts.
210-20-45-17
If both parties transfer the appropriate securities in settlement of the repurchase and reverse repurchase agreements, the party with a net receivable will not need any cash to facilitate the settlement, while the party with a net payable will need only to have available the required net amount due at the end of the business day.

210-20-50Disclosure

Source downloaded: .Record version dc5415a4bd3a. Effective date must be checked in the source.

Offsetting of Derivatives, Repurchase Agreements, and Securities Lending Transactions

210-20-50-1
The disclosure requirements in paragraphs
210-20-50-2 through 50-5
apply to both of the following:
  1. a
    Subparagraph superseded by Accounting Standards Update No. 2013-01.
  2. b
    Subparagraph superseded by Accounting Standards Update No. 2013-01.
  3. c
    Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements accounted for as collateralized borrowings and reverse repurchase agreements, and securities borrowing and securities lending transactions that are offset in accordance with either Section 210-20-45 or Section 815-10-45
  4. d
    Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or Section 815-10-45.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1The disclosure requirements in paragraphs
210-20-50-2 through 50-5
apply to both of the following in interim and annual reporting periods:
  1. a
  2. b
  3. c
    Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements accounted for as collateralized borrowings and reverse repurchase agreements, and securities borrowing and securities lending transactions that are offset in accordance with either Section 210-20-45 or Section 815-10-45
  4. d
    Recognized derivative instruments accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or Section 815-10-45.
210-20-50-2
An entity shall disclose information to enable users of its financial statements to evaluate the effect or potential effect of netting arrangements on its financial position for recognized assets and liabilities within the scope of paragraph 210-20-50-1. This includes the effect or potential effect of rights of setoff associated with an entity's recognized assets and recognized liabilities that are in the scope of paragraph 210-20-50-1.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, an entity shall disclose information to enable users of its financial statements to evaluate the effect or potential effect of netting arrangements on its financial position for recognized assets and liabilities within the scope of paragraph 210-20-50-1. This includes the effect or potential effect of rights of setoff associated with an entity's recognized assets and recognized liabilities that are in the scope of paragraph 210-20-50-1.
210-20-50-3
To meet the objective in paragraph 210-20-50-2, an entity shall disclose at the end of the reporting period the following quantitative information separately for assets and liabilities that are within the scope of paragraph 210-20-50-1:
  1. a
    The gross amounts of those recognized assets and those recognized liabilities
  2. b
    The amounts offset in accordance with the guidance in Sections 210-20-45 and 815-10-45 to determine the net amounts presented in the statement of financial position
  3. c
    The net amounts presented in the statement of financial position
  4. d
    The amounts subject to an enforceable master netting arrangement or similar agreement not otherwise included in (b):
    1. 1
      The amounts related to recognized financial instruments and other derivative instruments that either:
      1. i
        Management makes an accounting policy election not to offset.
      2. ii
        Do not meet some or all of the guidance in either Section 210-20-45 or Section 815-10-45.
    2. 2
      The amounts related to financial collateral (including cash collateral).
  5. e
    The net amount after deducting the amounts in (d) from the amounts in (c).
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1To meet the objective in paragraph 210-20-50-2, an entity shall disclose at the end of interim and annual reporting periods the following quantitative information separately for assets and liabilities that are within the scope of paragraph 210-20-50-1:
  1. a
    The gross amounts of those recognized assets and those recognized liabilities
  2. b
    The amounts offset in accordance with the guidance in Sections 210-20-45 and 815-10-45 to determine the net amounts presented in the statement of financial position
  3. c
    The net amounts presented in the statement of financial position
  4. d
    The amounts subject to an enforceable master netting arrangement or similar agreement not otherwise included in (b):
    1. 1
      The amounts related to recognized financial instruments and other derivative instruments that either:
      1. i
        Management makes an accounting policy election not to offset.
      2. ii
        Do not meet some or all of the guidance in either Section 210-20-45 or Section 815-10-45.
    2. 2
      The amounts related to financial collateral (including cash collateral).
  5. e
    The net amount after deducting the amounts in (d) from the amounts in (c).
210-20-50-4
The information required by paragraph 210-20-50-3 shall be presented in a tabular format, separately for assets and liabilities, unless another format is more appropriate. The total amount disclosed in accordance with paragraph 210-20-50-3(d) for an instrument shall not exceed the amount disclosed in accordance with paragraph 210-20-50-3(c) for that instrument.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, the information required by paragraph 210-20-50-3 shall be presented in a tabular format, separately for assets and liabilities, unless another format is more appropriate. The total amount disclosed in accordance with paragraph 210-20-50-3(d) for an instrument shall not exceed the amount disclosed in accordance with paragraph 210-20-50-3(c) for that instrument.
210-20-50-5
An entity shall provide a description of the rights of setoff associated with an entity's recognized assets and recognized liabilities subject to an enforceable master netting arrangement or similar agreement disclosed in accordance with paragraph 210-20-50-3(d), including the nature of those rights.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, an entity shall provide a description of the rights of setoff associated with an entity's recognized assets and recognized liabilities subject to an enforceable master netting arrangement or similar agreement disclosed in accordance with paragraph 210-20-50-3(d), including the nature of those rights.
210-20-50-6
If the information required by paragraphs
210-20-50-1 through 50-5
is disclosed in more than a single note to the financial statements, an entity shall cross-reference between those notes.

210-20-55Implementation Guidance and Illustrations

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Implementation Guidance

210-20-55-1
This Section provides additional guidance and illustrations that address the application of the disclosures for derivative instruments and other financial instruments.
210-20-55-6
Instruments disclosed in accordance with paragraph 210-20-50-3 may be subject to different measurement attributes (for example, a payable related to a repurchase agreement may be measured at amortized cost, while a derivative will be measured at fair value). An entity should include instruments at their recognized amounts and describe any resulting measurement differences in the related disclosures.
210-20-55-7
The disclosures required by paragraph 210-20-50-3(a) relate solely to recognized assets and liabilities within the scope of paragraph 210-20-50-1.
210-20-55-8
Paragraph 210-20-50-3(b) requires that entities disclose the amounts offset in accordance with Sections 210-20-45 and 815-10-45 to determine the net amounts presented in the statement of financial position. The amounts of both the recognized assets and the recognized liabilities subject to setoff under the same arrangement will be disclosed in the respective tables; however, the amounts included in the tables are limited to the amount that is subject to setoff. For example, an entity may have a recognized derivative asset and recognized derivative liability that meet the offsetting guidance in Section 815-10-45. If the gross amount of the derivative asset is larger than the gross amount of the derivative liability, the asset disclosure table will include the entire amount of the derivative asset and the entire amount of the derivative liability. The liability disclosures table, however, will include the entire amount of the derivative liability, but it will only include the amount of the derivative asset equal to the amount of the derivative liability.
210-20-55-9
If an entity has instruments that meet the scope of the disclosures but that do not meet the offsetting guidance in either Section 210-20-45 or Section 815-10-45 or that management does not elect to offset, the amounts required to be disclosed by paragraph 210-20-50-3(c) would equal the amounts required to be disclosed by paragraph 210-20-50-3(a).
210-20-55-10
The amounts required by paragraph 210-20-50-3(c) must be reconciled to the individual line item amount(s) presented in the statement of financial position. For example, if an entity determines that the aggregation or disaggregation of individual financial statement line items provides more relevant information, it must reconcile the aggregated or disaggregated amounts disclosed in accordance with paragraph 210-20-50-3(c) to the statement of financial position.
210-20-55-10A
An entity also may elect to include all recognized derivatives accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions in the scope of paragraph 210-20-50-1 to reconcile to the individual line-item amount(s) presented in the statement of financial position. For instruments not subject to an enforceable master netting arrangement or similar agreement, the amounts disclosed in accordance with paragraph 210-20-50-3(a) would equal the amounts disclosed for those instruments in accordance with both paragraph 210-20-50-3(c) and paragraph 210-20-50-3(e).
210-20-55-11
Paragraph 210-20-50-3(d) requires that entities disclose other amounts for instruments that are within the scope of paragraph 210-20-50-1 but are not included in paragraph 210-20-50-3(b). These amounts include those that meet the guidance in either Section 210-20-45 or Section 815-10-45 to qualify for offsetting but management elects not to offset.
210-20-55-12
An entity should also disclose the fair value amounts related to cash or financial instrument collateral received or pledged (see paragraph 210-20-50-3(d)(2)).
210-20-55-13
When disclosing amounts in accordance with paragraph 210-20-50-3(d), an entity must take into account the effect of overcollateralization by instrument. To do so, an entity must first deduct the amounts disclosed in accordance with paragraph 210-20-50-3(d)(1) from the amount disclosed in accordance with paragraph 210-20-50-3(c). An entity should then limit the amounts disclosed in accordance with paragraph 210-20-50-3(d)(2) to the remaining amount for the related instrument. However, if rights to collateral can be enforced across financial instruments, such rights may be included in the disclosure provided in accordance with 210-20-50-3(d).
210-20-55-14
An entity should describe the types of rights of setoff and similar agreements disclosed in accordance with paragraph 210-20-50-3(d), including the nature of those rights. For example, for a conditional right of setoff, an entity should describe the related condition(s). For any financial collateral received or pledged, an entity should describe the terms of the collateral agreement (for example, when the collateral is restricted).
210-20-55-15
The disclosures required by paragraph 210-20-50-3(a) through (e) may be grouped by type of instrument or transaction (for example, derivatives, repurchase and reverse agreements, and securities borrowing and lending agreements).
210-20-55-16
Alternatively, an entity may group the information required by paragraph 210-20-50-3(a) through (c) by type of instrument and paragraph 210-20-50-3(c) through (e) by counterparty. If an entity provides the required information by counterparty, the entity is not required to identify the counterparties by name. However, designation of the counterparties (Counterparty A, Counterparty B, Counterparty C, and so forth) should remain consistent from year to year to maintain comparability, and qualitative disclosures should be considered to give further information about the types of counterparties. When disclosure of the amounts in paragraph 210-20-50-3(c) through (e) is provided by counterparty, the amounts related to individually significant counterparties with respect to total counterparty amounts should be separately disclosed, and the remaining individually insignificant counterparties should be aggregated into one line item.
210-20-55-17
The disclosures required by paragraphs
210-20-50-3 through 50-5
are minimum requirements, and to meet the objective in paragraph 210-20-50-2 an entity may need to supplement the disclosures with additional (qualitative) disclosures depending on the terms of the enforceable master netting arrangements and related agreements, including the nature of the rights of setoff and their effect or potential effect on the entity's financial position.
210-20-55-18
An entity should present the disclosures in a manner that clearly explains to users of its financial statements the nature of rights of setoff and related arrangements and their effect on the entity's assets and liabilities in the scope of paragraph 210-20-50-1 and its financial position. An entity should determine how much detail it must provide to satisfy the disclosure requirements. The entity must strike a balance between obscuring important information because of excessive aggregation and obscuring important information because of excessive detail that may not help users of financial statements to understand the entity's financial position. For example, an entity should not disclose information that is so aggregated that it obscures important differences between the different types of rights of setoff or related arrangements.
210-20-55-18A
Cash on deposit at a financial institution shall be considered by the depositor as cash rather than as an amount owed to the depositor.

Illustrations

210-20-55-19
The following Examples illustrate ways to meet the quantitative disclosure requirements in paragraphs
210-20-50-1 through 50-5
by type of financial instrument or other derivative instrument.
210-20-55-20
In this Example, the reporting entity has entered into transactions subject to an enforceable master netting arrangement or other similar agreement with the following counterparties. The reporting entity has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements in paragraph 210-20-50-1. This Example has the following assumptions.
  1. a
    Counterparty A:
    1. 1
      The reporting entity has a derivative asset (fair value of $100 million) and a derivative liability (fair value of $80 million) with Counterparty A. Assume that the entity qualifies for and makes an accounting policy election to offset in accordance with Section 815-10-45. Cash collateral also has been received from Counterparty A for a portion of the net derivative asset ($10 million). The derivative liability and the cash collateral received are set off against the derivative asset in the statement of financial position, resulting in the presentation of a net derivative asset of $10 million.
  2. b
    Counterparty B:
    1. 1
      The reporting entity had entered into a sale and repurchase agreement with Counterparty B that is accounted for as a collateralized borrowing. The carrying value of the financial asset (bonds) used as collateral and held by the reporting entity for the transaction is $79 million, and their fair value is $85 million. The carrying value of the collateralized borrowing (repo payable) is $80 million.
    2. 2
      The reporting entity also has entered into a reverse sale and repurchase agreement with Counterparty B that is accounted for as a collateralized lending. The fair value of the asset (bonds) received as collateral (and not recognized in the statement of financial position) is $105 million. The carrying value of the secured lending (reverse repo receivable) is $90 million.
    3. 3
      Assume that the transactions are not offset.
  • Application of Paragraph 210-20-50-3(a)-(e) Offsetting of Financial Assets and Derivative Assets $ million "As of December 31, 20XX " (i) (ii) (iii) = (i) - (ii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount Description Derivatives $100 $(90) $10 $ - $ - $10 "Reverse repurchase, securities borrowing, and similar arrangements " 90 - 90 (90) - - Total $190 $(90) $100 $(90) $ - $10
  • Offsetting of Financial Liabilities and Derivative Liabilities $ million "As of December 31, 20XX " (i) (ii) (iii) = (i) - (ii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position "Net Amounts of Liabilities Presented in the Statement of Financial Position" Financial Instruments Cash Collateral Pledged Net Amount Description Derivatives $80 $(80) $ - $ - $ - $- "Repurchase, securities lending, and similar arrangements" 80 - 80 (80) - - Total $160 $(80) $80 $(80) $ - $-
210-20-55-21
The following table illustrates how an entity might provide the quantitative disclosure requirements in paragraph 210-20-50-3(a) through (c) by type of instrument and the information required in paragraph 210-20-50-3(c) through (e) by counterparty.
  • Application of Paragraph 210-20-50-3(a)-(c) by Instrument and Paragraph 210-20-50-3(c)-(e) by Counterparty Offsetting of Financial Liabilities and Derivative Liabilities $ million "As of December 31, 20XX" (i) (ii) (iii) = (i) - (ii) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Description Derivatives $80 $(80) $ - "Repurchase, securities lending, and similar arrangements" 80 - 80 Total $160 $(80) $80 "Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty " $ million "As of December 31, 20XX" (iii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Financial Instruments "Cash Collateral Pledged" Net Amount Counterparty A $ - $ - $ - $ - Counterparty B 80 (80) - - Other Total $80 $(80) $ - $ -
  • Application of Paragraph 210-20-50-3(a)-(c) by Instrument and Paragraph 210-20-50-3(c)-(e) by Counterparty Offsetting of Financial Assets and Derivative Assets $ million "As of December 31, 20XX" (i) (ii) (iii) = (i) - (ii) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Description Derivatives $100 $(90) $10 "Reverse repurchase, securities borrowing, and similar arrangements" 90 - 90 Total $190 $(90) $100 "Financial Assets, Derivative Assets, and Collateral Held by Counterparty " $ million "As of December 31, 20XX" (iii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Net Amount of Assets in the Statement of Financial Position Financial Instruments "Cash Collateral Received" Net Amount Counterparty A $10 $ - $ - $10 Counterparty B 90 (90) - - Other Total $100 $(90) $ - $10
210-20-55-22
The following table illustrates how a sophisticated entity that engages in significant derivative activity might provide the quantitative disclosure requirements in paragraph 210-20-50-3(a) through (c) by type of instrument and paragraph 210-20-50-3(c) through (e) by type of counterparty. In this Example, the entity further disaggregates the derivative line item by type of contract as discussed in paragraph 815-10-50-4D, with further disaggregation based on how the derivative is transacted.
  • Application of Paragraph 210-20-50-3(a)-(c) by Instrument and Paragraph 210-20-50-3(c)-(e) by Counterparty Offsetting of Financial Assets and Derivative Assets $ million "As of December 31, 20XX" (i) (ii) (iii) = (i) - (ii) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Description Derivatives Interest rate contracts Over the counter " $XX,XXX " " $XX,XXX " " $XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Foreign exchange contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Equity contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Commodity contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Credit contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Other contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " "Total derivatives, subject to a master netting arrangement or similar arrangement" " XX,XXX " " XX,XXX " " XX,XXX " "Total derivatives, not subject to a master netting arrangement or similar arrangement" " XX,XXX " " XX,XXX " " XX,XXX " Total derivatives " XX,XXX " " XX,XXX " " XX,XXX " "Reverse repurchase, securities borrowing, and similar arrangements " " XX,XXX " " XX,XXX " " XX,XXX " Other financial instruments " XX,XXX " " XX,XXX " " XX,XXX " Total " $XX,XXX " " $XX,XXX " " $XX,XXX "
  • "Financial Assets, Derivative Assets, and Collateral Held by Counterparty " $ million "As of December 31, 20XX" (iii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Net Amount of Assets in the Statement of Financial Position "Financial Instruments" Cash Collateral Received Net Amount Counterparty A "$XX,XXX" "$XX,XXX" "$XX,XXX" "$XX,XXX" Counterparty B "XX,XXX" "XX,XXX" "XX,XXX" "XX,XXX" Other "XX,XXX" "XX,XXX" "XX,XXX" "XX,XXX" Total "$XX,XXX" "$XX,XXX" "$XX,XXX" "$XX,XXX"
  • Application of Paragraph 210-20-50-3(a)-(c) by Instrument and Paragraph 210-20-50-3(c)-(e) by Counterparty Offsetting of Financial Liabilities and Derivative Liabilities $ million "As of December 31, 20XX" (i) (ii) (iii) = (i) - (ii) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Description Derivatives Interest rate contracts Over the counter " $XX,XXX " " $XX,XXX " " $XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Foreign exchange contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Equity contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Commodity contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Credit contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " Other contracts Over the counter " XX,XXX " " XX,XXX " " XX,XXX " Exchange traded " XX,XXX " " XX,XXX " " XX,XXX " Exchange cleared " XX,XXX " " XX,XXX " " XX,XXX " "Total derivatives, subject to a master netting arrangement or similar arrangement" " XX,XXX " " XX,XXX " " XX,XXX " "Total derivatives, not subject to a master netting arrangement or similar arrangement" " XX,XXX " " XX,XXX " " XX,XXX " Total derivatives " XX,XXX " " XX,XXX " " XX,XXX " "Reverse repurchase, securities borrowing, and similar arrangements " " XX,XXX " " XX,XXX " " XX,XXX " Total " $XX,XXX " " $XX,XXX " " $XX,XXX "
  • "Financial Liabilities, Derivative Liabilities, and Collateral Held by Counterparty " $ million "As of December 31, 20XX" (iii) (iv) (v) = (iii) - (iv) Gross Amounts Not Offset in the Statement of Financial Position Net Amount of Liabilities in the Statement of Financial Position "Financial Instruments" Cash Collateral Pledged Net Amount Counterparty A " $XX,XXX " " $XX,XXX " " $XX,XXX " " $XX,XXX " Counterparty B " XX,XXX " " XX,XXX " " XX,XXX " " XX,XXX " Other " XX,XXX " " XX,XXX " " XX,XXX " " XX,XXX " Total " $XX,XXX " " $XX,XXX " " $XX,XXX " " $XX,XXX "

210-20-60Relationships

Source downloaded: .Record version 2f3b084ee954. Effective date must be checked in the source.

Compensation—Retirement Benefits

210-20-60-1
For guidance on accounting for pension plan assets and liabilities, see Subtopic 715-30.
210-20-60-2
For guidance on accounting for plan assets and liabilities, see Subtopic 715-60.

Income Taxes

210-20-60-3
For guidance on amounts reported for net tax assets or liabilities, see Subtopic 740-10.

Derivatives and Hedging

210-20-60-3A
For guidance on derivative instruments with the right to reclaim cash collateral or the obligation to return cash collateral, see paragraphs
815-10-45-1 through 45-7
.

Leases

210-20-60-4
For guidance on leveraged leases, see Section 842-50-35.

Contractors—Federal Government

210-20-60-5
For guidance on advances received on construction contracts, see Subtopic 910-405.

Financial Services—Brokers and Dealers

210-20-60-6
For guidance on trade date accounting for trading portfolio positions, see Subtopic 940-320.

Financial Services—Depository and Lending

210-20-60-7
For guidance on reciprocal balances with other banks, see paragraph 942-210-45-3A.

210-20-65Transition and Open Effective Date Information

Source downloaded: .Record version e150d3306f6c. Effective date must be checked in the source.

210-20-65-1
Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.
210-20-65-2
Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.

Related subtopics