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. 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.
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.