# ASC 860-10-05: Transfers and Servicing — Overall — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/10/#05-overview-and-background) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:6ef43032be09e812405461c138830a3abc533690a979dbff389021ea259e4f37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/860/10/#05-overview-and-background) SEC content: no ##### [860-10-05-1](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:63f0254b89b9e2bf3f0d324f5f414dbb85bbbd9b197f8e8463d17fe82dab88f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Transfers and Servicing Topic establishes accounting and reporting standards for [transfers](https://asc.understandingaccounting.org/glossary/t/#transfer "The conveyance of a noncash financial asset by and to someone other than the issuer of that financial asset. A transfer includes the following: Selling a receivable Putting a receivable into a securitization trust Posting a receivable as collateral. A transfer excludes the following: The origination of a receivable Settlement of a receivable The restructuring of a receivable into a security in a troubled debt restructuring.") and servicing of [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."). It also establishes the accounting for transfers of servicing rights. ##### [860-10-05-2](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:6958c29b7ccb966b2326e436d4d73e8292db24c65c0be112f0623b49bc94f6e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Transfers and Servicing Topic includes the following four Subtopics: 1. a Overall 2. b Sales of Financial Assets 3. c Secured Borrowings and Collateral 4. d [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 5. e Servicing Assets and Liabilities. #### Transfers of Financial Assets ##### [860-10-05-3](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:3dac78028398dee2940db08fc6bba0d5cce5c315a3e4bd5ab8cd009c0de1e9e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic, together with the other Subtopics within this Topic, provides accounting and reporting standards for transfers and servicing of financial assets. It also addresses transfers of servicing rights. ##### [860-10-05-4](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:cd37559326ff0ebd789e0bf95891a72b7e2bb29976e8741ac1bb2b5adae07ea9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for transfers in which the [transferor](https://asc.understandingaccounting.org/glossary/t/#transferor "An entity that transfers a financial asset, an interest in a financial asset, or a group of financial assets that it controls to another entity.") has no [continuing involvement](https://asc.understandingaccounting.org/glossary/c/#continuing-involvement "Any involvement with the transferred financial assets that permits the transferor to receive cash flows or other benefits that arise from the transferred financial assets or that obligates the transferor to provide additional cash flows or other assets to any party related to the transfer. For related implementation guidance, see paragraph 860-10-55-79A.") with the [transferred financial assets](https://asc.understandingaccounting.org/glossary/t/#transferred-financial-assets "Transfers of any of the following: An entire financial asset A group of entire financial assets A participating interest in an entire financial asset.") or with the [transferee](https://asc.understandingaccounting.org/glossary/t/#transferee "An entity that receives a financial asset, an interest in a financial asset, or a group of financial assets from a transferor.") has not been controversial. However, transfers of financial assets often occur in which the transferor has some continuing involvement either with the assets transferred or with the transferee. Examples of continuing involvement with the transferred financial assets include, but are not limited to, any of the following: 1. a Servicing arrangements 2. aa [Recourse](https://asc.understandingaccounting.org/glossary/r/#recourse "The right of a transferee of receivables to receive payment from the transferor of those receivables for any of the following: Failure of debtors to pay when due The effects of prepayments Adjustments resulting from defects in the eligibility of the transferred receivables.") arrangements 3. aaa Guarantee arrangements 4. b [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 5. c Agreements to purchase or redeem transferred financial assets 6. d Options written or held 7. dd [Derivative financial instruments](https://asc.understandingaccounting.org/glossary/d/#derivative-financial-instrument "A derivative instrument that is a financial instrument.") that are entered into contemporaneously with, or in contemplation of, the transfer 8. ddd Arrangements to provide financial support 9. e Pledges of [collateral](https://asc.understandingaccounting.org/glossary/c/#collateral "Personal or real property in which a security interest has been given.") 10. f The transferor's [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") in the transferred financial assets. Transfers of financial assets with continuing involvement raise issues about the circumstances under which the transfers should be considered as sales of all or part of the assets or as secured borrowings and about how transferors and transferees should account for sales and secured borrowings. This Topic establishes standards for resolving those issues. ##### [860-10-05-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:a26866c76649dc394e8a7a09b1968aa8f5255cdfe089a624b626e24231735ed8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sales and other transfers may result in a disaggregation of financial assets and liabilities into components, which become separate assets and liabilities. This Subtopic provides guidance on accounting for such transfers and provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. #### Types of Transfers ##### [860-10-05-6](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:a3157f3025d02a858dd00c288a3852ae9bc24abdf970f6bdfb0c706ba70f2c70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transfers of financial assets take many forms. This guidance provides an overview of the following types of transfers discussed in this Topic: 1. a [Securitizations](https://asc.understandingaccounting.org/glossary/s/#securitization "The process by which financial assets are transformed into securities.") 2. b Factoring 3. c Transfers of receivables with recourse 4. d Securities lending transactions 5. e [Repurchase agreements](https://asc.understandingaccounting.org/glossary/r/#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. Instead of cash, other securities or letters of credit sometimes are exchanged. Some repurchase agreements call for repurchase of financial assets that need not be identical to the financial assets transferred.") 6. f [Loan participations](https://asc.understandingaccounting.org/glossary/l/#loan-participation "A transaction in which a single lender makes a large loan to a borrower and subsequently transfers undivided interests in the loan to groups of banks or other entities.") 7. g Banker's acceptances. ##### [860-10-05-7](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:9b417275f50192b3ad0b9d45314de67436fe5cf284073b85d6ea985a05153ee8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An originator of a typical securitization (the transferor) transfers a portfolio of financial assets to a securitization entity, commonly a trust. Financial assets such as mortgage loans, automobile loans, trade receivables, credit card receivables, and other revolving charge accounts are financial assets commonly transferred in securitizations. Securitizations of mortgage loans may include pools of single-family residential mortgages or other types of real estate mortgage loans, for example, multifamily residential mortgages and commercial property mortgages. Securitizations of loans secured by chattel mortgages on automotive vehicles as well as other equipment (including direct financing or sales-type leases) also are common. ##### [860-10-05-8](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:50bbe54e00fbd596fc539e3780a6e5cf71a600fb1b48cb7f98acafc3b5531357 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beneficial interests in the securitization entity are sold to investors and the proceeds are used to pay the transferor for the transferred financial assets. Those beneficial interests may comprise either a single class having equity characteristics or multiple classes of interests, some having debt characteristics and others having equity characteristics. The cash collected from the portfolio is distributed to the investors and others as specified by the legal documents that established the entity. ##### [860-10-05-9](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:e4309d53b818857fc966b155b87d255128018db2a63d786cf9a56d0153fa1504 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). ##### [860-10-05-10](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:2fd304261e0e09f1d8d2fb653f70669dceac5f6d85e8db8fdff418bf4332716b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). ##### [860-10-05-11](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:22451042d7d2622445376f5c2388b9c152c6e4f3dafbe33ce08b404b3ca8608d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Securitizations of credit card and other receivable portfolios usually involve a specified reinvestment period (usually 18 to 36 months), during which the trust will purchase additional credit card receivables generated by the selected accounts. After the reinvestment period, a period of liquidation occurs during which the investors receive an allocated portion of principal payments relating to receivables in the trust. The [liquidation method](https://asc.understandingaccounting.org/glossary/l/#liquidation-method "The method used to allocate the principal payments on the receivables in a trust to the investors.") may vary depending on the terms of the agreement and may be a participation method (payout allocation rate may be fixed, preset, or variable) or a [controlled amortization method](https://asc.understandingaccounting.org/glossary/c/#controlled-amortization-method "Liquidation method used to allocate principal payments on the receivables in a trust to the investors, under which a predetermined monthly payment schedule is established so that payout to the investors will occur over a specified liquidation period. Principal payments are allocated to the investors based on their participation interests in the receivables in the trust, using one of the liquidation methods (fixed, preset, or floating). Principal payments in excess of the predetermined monthly payment, if any, are allocated to the transferor and increase the investors' ownership interests. If the principal payments allocated to the investors are insufficient to cover the predetermined monthly payment, that payment is reduced by the amount of the deficiency. If the principal payments allocated to the investors in subsequent months exceed the predetermined monthly payment, the deficiency is recovered.") (payout based on a predetermined schedule). Specific methods are as follows: 1. a [Fixed participation method](https://asc.understandingaccounting.org/glossary/f/#fixed-participation-method "Liquidation method used to allocate principal payments on the receivables in a trust to the investors, under which all principal payments on the receivables in the trust are allocated to the investors based on their respective participation interests in the credit card receivables in the trust at the end of the reinvestment period.") 2. b [Floating participation method](https://asc.understandingaccounting.org/glossary/f/#floating-participation-method "Liquidation method used to allocate principal payments on the receivables in a trust to the investors, under which principal payments allocated to the investors are based on the investors' actual participation interests in the receivables in the trust each month. Each month, investors' participation interests in the credit card receivables in the trust are redetermined for that month's allocation of principal payments.") 3. c [Preset participation method](https://asc.understandingaccounting.org/glossary/p/#preset-participation-method "Liquidation method used to allocate principal payments on receivables in a trust to investors. The preset participation method is similar to the fixed participation method except that the percentage used to determine the principal payments allocated to the investors is preset higher than the investors' expected participation interests in the receivables in the trust at the end of the reinvestment period. This method results in a faster payout to the investors than the fixed participation method because a higher percentage of the principal payments is allocated to the investors."). ##### [860-10-05-12](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:f9ac49fb45f77680fdc9f2a0c9a2a55b3f40e52d9c6f60e284514671af153486 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Credit card securitizations (and other types of securitizations) may include a removal-of-accounts provision that permits the [seller](https://asc.understandingaccounting.org/glossary/s/#seller "A transferor that relinquishes control over financial assets by transferring them to a transferee in exchange for consideration."), under certain conditions and with trustee approval, to withdraw receivables from the pool of securitized receivables. ##### [860-10-05-13](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:60a29b66bb762ab969ecc5d4c9af8219cecff2c2cb52fcd6ff8e0c9efa7bc3a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many securitization structures provide for a disproportionate distribution of cash flows to various classes of investors during the amortization period, which is referred to as a turbo provision. For example, a turbo provision might require the first $100 million of cash received during the amortization period of the securitization structure to be paid to one class of investors before any cash is available for repayment to other investors. Similarly, certain revolving-period securitizations use what is referred to as a bullet provision as a method of distributing cash to their investors. Under a bullet provision, during a specified period preceding liquidating distributions to investors, cash proceeds from the underlying assets are reinvested in short-term investments other than the underlying revolving-period receivables. Those investments mature or are otherwise liquidated to make a single bullet payment to certain classes of investors. ##### [860-10-05-14](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:a30539676f33a307e2c904b3b7d59b33ab4f9c6f33f1f58fe9ed5761403382b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Factoring arrangements are a means of discounting accounts receivable on a nonrecourse, notification basis. Accounts receivable in their entireties are sold outright, usually to a transferee (the factor) that assumes the full risk of collection, without recourse to the transferor in the event of a loss. Debtors are directed to send payments to the transferee. ##### [860-10-05-15](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:8167bf3a46a1346453f4ef6393e597c32ee5e0580455c3cbc24c4110045138ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a transfer of an entire receivable, a group of entire receivables, or a portion of an entire receivable with recourse, the transferor provides the transferee with full or limited recourse. The transferor is obligated under the terms of the recourse provision to make payments to the transferee or to repurchase receivables sold under certain circumstances, typically for defaults up to a specified percentage. ##### [860-10-05-16](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:4462009b54b7a0de32fb1dd8450cf24efde38d0cb492b0631d2d35883ed4c354 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Securities lending transactions are initiated by broker-dealers and other financial institutions that need specific securities to cover a short sale or a customer's failure to deliver securities sold. Securities custodians or other [agents](https://asc.understandingaccounting.org/glossary/a/#agent "A party that acts for and on behalf of another party. For example, a third-party intermediary is an agent of the transferor if it acts on behalf of the transferor.") commonly carry out securities lending activities on behalf of clients. ##### [860-10-05-17](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:b2c054b0b3401cfb827073d956956764a41f08d0b0631fab9c5cc04ddc7f0fe2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transferees (borrowers) of securities generally are required to provide collateral to the transferor (lender) of securities, commonly cash but sometimes other securities or standby letters of credit, with a value slightly higher than that of the securities borrowed. If the collateral is cash, the transferor typically earns a return by investing that cash at rates higher than the rate paid or rebated to the transferee. If the collateral is other than cash, the transferor typically receives a fee. ##### [860-10-05-18](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:8823f5ba24ef79b1e2d6c4e7cf302fe23adfa6022f9687efa73551705c9fd75c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the protection of collateral (typically valued daily and adjusted frequently for changes in the market price of the securities transferred) and the short terms of the transactions, most securities lending transactions in themselves do not impose significant credit risks on either party. Other risks arise from what the parties to the transaction do with the assets they receive. For example, investments made with cash collateral impose market and credit risks on the transferor. ##### [860-10-05-19](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:fd273c3aa1faef7796d20e51d9c2278283b39e60a5dee35bdac03d57a94627e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Government securities dealers, banks, other financial institutions, and corporate investors commonly use [repurchase agreements](https://asc.understandingaccounting.org/glossary/r/#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. Instead of cash, other securities or letters of credit sometimes are exchanged. Some repurchase agreements call for repurchase of financial assets that need not be identical to the financial assets transferred.") to obtain or use short-term funds. ##### [860-10-05-20](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:52c0f9145106e2b0ea8da50a84e345408cdf5fc8bf465a9c7b40d1e936aaf48c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Repurchase agreements can be effected in a variety of ways. Some repurchase agreements are similar to securities lending transactions in that the transferee has the right to sell or repledge the securities to a third party during the term of the repurchase agreement. In other repurchase agreements, the transferee does not have the right to sell or repledge the securities during the term of the repurchase agreement. For example, in a tri-party repurchase agreement, the transferor transfers securities to an independent third-party custodian that holds the securities during the term of the repurchase agreement. ##### [860-10-05-21](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:2f4e05b2697bbf352dd87a22a6e4626e9ebdd257840842a9b82d485287591720 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many repurchase agreements are for short terms, often overnight, or have indefinite terms that allow either party to terminate the arrangement on short notice. Other repurchase agreements are for longer terms, sometimes until the maturity of the transferred financial asset (repo to maturity). ##### [860-10-05-21A](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-21A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:c00f0f6bf79a795be836a8e18e9a858606e7158106b27d141a085beb4f48a998 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-11](https://asc.understandingaccounting.org/updates/asu-2014-11/). ##### [860-10-05-21B](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-21B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:3c434918724dd640b69ceeff1e507cfd374d246cb1100cdbad91c5196a779d2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-11](https://asc.understandingaccounting.org/updates/asu-2014-11/). ##### [860-10-05-22](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:ff01368910a0d0c6f11a1340f86bbb4101b44e52486373849a4f5a70eb9b6025 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In certain industries, a typical customer's borrowing needs often exceed its bank's legal lending limits. To accommodate the customer, the bank may participate the loan to other banks (that is, transfer under a participation agreement a portion of the customer's loan to one or more participating banks). ##### [860-10-05-23](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:6a4fe366978dd97c5e4c13d4807ee4f3a1b92830726f5dcf7026dc56bcb5ca5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transfers by the originating lender may take the legal form of either assignments or participations. The transfers are usually on a nonrecourse basis, and the transferor (originating lender) continues to service the loan. The transferee (participating entity) may or may not have the right to sell or transfer its participation during the term of the loan, depending on the terms of the participation agreement. ##### [860-10-05-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:724f0a7ff5e477e721b2096a43016f53ed09454279f0830942f449fb2b6ff20f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Banker's acceptances provide a way for a bank to finance a customer's purchase of goods from a vendor for periods usually not exceeding six months. Under an agreement between the bank, the customer, and the vendor, the bank agrees to pay the customer's liability to the vendor upon presentation of specified documents that provide evidence of delivery and acceptance of the purchased goods. The principal document is a draft or bill of exchange drawn by the customer that the bank stamps to signify its acceptance of the liability to make payment on the draft on its due date. ##### [860-10-05-25](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:667e103d14cb9f2cafb7bfb952f01d762a47462cd3c808a2cb7cf2c9186a13ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once the bank accepts a draft, the customer is liable to repay the bank at the time the draft matures. The bank recognizes a receivable from the customer and a liability for the acceptance it has issued to the vendor. The accepted draft becomes a negotiable financial instrument. The vendor typically sells the accepted draft at a discount either to the accepting bank or in the marketplace. ##### [860-10-05-26](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:28.589Z to 2026-09-10T02:05:28.589Z Record version: sha256:4b0303219383f61cc088c47deab95ce234d4e02beb62850b435f0474cb67c50e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A risk participation is a contract between the accepting bank and a participating bank in which the participating bank agrees, in exchange for a fee, to reimburse the accepting bank in the event that the accepting bank's customer fails to honor its liability to the accepting bank in connection with the banker's acceptance. The participating bank becomes a guarantor of the credit of the accepting bank's customer.