{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/825/942/#50-disclosure","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"825","topic_title":"Financial Instruments","subtopic":"825-942","subtopic_title":"Financial Services—Depository and Lending","section":{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":"Off-Balance-Sheet Credit Risk","paragraphs":[{"citation":"825-942-50-1","para":"50-1","html":"
Off-balance-sheet credit risk refers to credit risk on off-balance-sheet loan commitments, standby letters of credit, financial guarantees, and other similar instruments, except for instruments within the scope of Topic 815. For financial instruments with off-balance-sheet credit risk, except for those instruments within the scope of that Topic, an entity shall disclose all of the following information:
  1. a
    The face or contract amount
  2. b
    The nature and terms, including, at a minimum, a discussion of the:
    1. 1
      Credit and market risk of those instruments
    2. 2
      Cash requirements of those instruments
    3. 3
      Related accounting policy pursuant to Subtopic 235-10.
  3. c
    The entity's policy for requiring collateral or other security to support financial instruments subject to credit risk, information about the entity's access to that collateral or other security, and the nature and a brief description of the collateral or other security supporting those financial instruments.
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Examples of activities and financial instruments with off-balance-sheet credit risk include obligations for loans sold with recourse (with or without a floating-interest-rate provision), fixed-rate and variable-rate loan commitments, financial guarantees, note issuance facilities at floating rates, and letters of credit. An entity (guarantor) may \"lend\" its creditworthiness to another party (borrower) for a fee, thereby enhancing that other party's ability to borrow funds. The guarantor may provide a general guarantee of repayment of the borrower's obligation or may pledge specific assets that may be claimed by the creditor in the event of the borrower's default. A loan guarantee typically involves two sets of fees: an initial fee due at the consummation of the transaction and a continuing (annual) fee due over the term of the guarantee. A guarantor may be required to disclose and account for a financial guarantee under Topic 460 on guarantees. See Topic 815 on derivatives and hedging for guarantees accounted for as a derivative.
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