# ASC 860-10-55: Transfers and Servicing — Overall — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/10/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:9cff3536c3d1523de6cf529a5eb8c2edb9e7bb9a563fbe7c99136a524b77a96e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/860/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [860-10-55-1](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:3c8d28b61544b921a55da110e33ab61f21604d3b8b885ec504a859b02a453162 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is organized as follows: 1. a Scope 2. aa Consolidation of transferee by transferor 3. aaa Application of the term [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.") 4. b Isolation of transferred [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.") 5. c [Transferee's](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.") right to pledge or exchange transferred financial assets 6. d Effective control 7. e Application of sale conditions to specific transactions 8. f Classification of transferred debt securities 9. g Recognition of a sale in separate-entity financial statements. 10. h [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). ##### [860-10-55-2](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:5153e3be144ef816eb3b3bbdf0edce67f2016f9a5332405919eeda140ef7e8ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses whether certain instruments and transactions are subject to the scope of this Subtopic (see Section 860-10-15), specifically: 1. a Examples of transactions and activities that are included in the scope 2. b Application of the term [transfer](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.") 3. c Application of the term financial asset 4. d Reacquisition by an entity of its own securities 5. e Exchange of one form of [beneficial interest](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.") for another 6. f Dollar-roll repurchase transactions 7. g [Repurchase financing](https://asc.understandingaccounting.org/glossary/r/#repurchase-financing "A repurchase agreement that relates to a previously transferred financial asset between the same counterparties (or consolidated affiliates of either counterparty) that is entered into contemporaneously with, or in contemplation of, the initial transfer."). ##### [860-10-55-3](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-3) Pending content: yes Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:e5e4462dcb9a511df68290382d6a10bc8a7a396a758672e2d72afe291f35bdbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic applies to the following transactions and activities, among others: 1. a All [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.") 2. b Transfers of equity method investments 3. c Transfers of cost-method investments 4. d With respect to the guidance in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) only, transfers of financial assets in desecuritization transactions. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)The guidance in this Topic applies to the following transactions and activities, among others: 1. a All [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.") 2. b Transfers of equity method investments 3. c Transfers of investments accounted for in accordance with Topic 321 on investments—equity securities 4. d With respect to the guidance in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) only, transfers of financial assets in desecuritization transactions. ##### [860-10-55-4](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b528149d7280b34029c97219de7beb5944080c9db8b8b180b263386767323e56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A payment of cash or a conveyance of noncash financial assets to the holder of a loan or other receivable in full or partial settlement of an obligation is not a transfer under this Subtopic. In addition, a [loan syndication](https://asc.understandingaccounting.org/glossary/l/#loan-syndication "A transaction in which several lenders share in lending to a single borrower. Each lender loans a specific amount to the borrower and has the right to repayment from the borrower. It is common for groups of lenders to jointly fund those loans when the amount borrowed is greater than any one lender is willing to lend.") is not a transfer of financial assets. See paragraph [310-10-25-4](https://asc.understandingaccounting.org/asc/310/10/#310-10-25-4) for further guidance on a loan syndication. ##### [860-10-55-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-5) Pending content: yes Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ccf0d874de76b3290f6ce8397ad4170bfea1da4b977365c3d981734f9f7c66e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following implementation guidance addresses whether certain instruments are financial assets, the transfer of which is subject to the guidance in this Subtopic, specifically: 1. a [Lease receivables](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") from [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") 2. b Securitized stranded costs 3. c Judgment from litigation 4. d Forward contract on a financial instrument 5. e Ownership interest in a consolidated subsidiary by its parent if the subsidiary holds nonfinancial assets 6. f Investment in a nonconsolidated investee. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)The following implementation guidance addresses whether certain instruments are financial assets, the transfer of which is subject to the guidance in this Subtopic, specifically: 1. a [Lease receivables](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") from [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") 2. b Securitized stranded costs 3. c Judgment from litigation 4. d Forward contract on a financial instrument 5. e Ownership interest in a consolidated subsidiary by its parent if the subsidiary holds nonfinancial assets 6. f Investment in a nonconsolidated investee. 7. g Receivables from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). ##### [860-10-55-6](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:13756d4916126ff29f15991451f9d0a2cec45bd4dd6fc3742049ebb25ab1d916 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lease receivables from sales-type and direct financing leases are made up of two components: the right to receive lease payments and guaranteed residual values. Lease payments for sales-type and direct financing leases involve requirements for lessees to pay cash to lessors and meet the definition of a financial asset. Residual values represent the lessor's estimate of the salvage value of the underlying asset at the end of the lease term and may be either guaranteed or unguaranteed. Residual values meet the definition of financial assets to the extent that they are guaranteed at the commencement of the lease. Thus, transfers of lease receivables from sales-type and direct financing leases are subject to the requirements of this Subtopic. [Unguaranteed residual assets](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") do not meet the definition of financial assets, nor do residual values guaranteed after commencement, and transfers of them are not subject to the requirements of this Subtopic. ##### [860-10-55-7](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:9ab9a6b7fb9afcd49feea5ccabe0dfd3500f1d61c36cf77e1e91d1b257487bd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The deregulation of utility rates charged for electric power generation has caused electricity-producing entities (utilities) to identify some of their electric power generation operations as stranded costs. Before deregulation, utilities typically expected to be reimbursed for costs through regulation of rates charged to customers. After deregulation, some of these costs may no longer be recoverable through unregulated rates. Hence, such potentially unrecoverable costs often are referred to as stranded costs. However, some of those stranded costs may be recovered through a surcharge or tariff imposed on rate-regulated goods or services provided by another portion of the entity whose pricing remains regulated. Some entities have securitized their enforceable rights to impose that tariff (often referred to as securitized stranded costs), thereby obtaining cash from investors in exchange for the future cash flows to be realized from collecting surcharges imposed on customers of the rate-regulated goods or services. ##### [860-10-55-8](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:5a19b004f0100c7e3775bb6db9b6cd52353c72f5f05c6ebf1804d5f13a04cddb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Securitized stranded costs are not financial assets, and therefore transfers of securitized stranded costs are not within the scope of this Subtopic. Securitized stranded costs are not financial assets because they are imposed on ratepayers by a state government or its regulatory commission and, thus, while an enforceable right for the utility, they are not a contractual right to receive payments from another party. To elaborate, while a right to collect cash flows exists, it is not the result of a contract and, thus, not a financial asset. ##### [860-10-55-9](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:43723e93d945c1c969c4a8b0b387b3e4866dca8982d5596a63d9e57f3b1107d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, [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 a [securitization](https://asc.understandingaccounting.org/glossary/s/#securitization "The process by which financial assets are transformed into securities.") trust that holds nonfinancial assets such as securitized stranded costs or other similar imposed rights would be considered financial assets by the third-party investors, unless that third party must consolidate the trust. The Variable Interest Entities Subsections of Subtopic 810-10 should be applied, together with other guidance on consolidation policy, as appropriate, to determine whether such a special-purpose entity should be consolidated by a third-party investor. ##### [860-10-55-10](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:95e4ab38cc1e7cce3018846c8b721283d5a302f4bf3fadc46ce76fb7d844c164 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A judgment from litigation is generally not a financial asset. However, the determination depends on the facts and circumstances. A contingent receivable that ultimately may require the payment of cash but does not as yet arise from a contract (such as a contingent receivable for a tort judgment) is not a financial asset. However, when that judgment becomes enforceable by a government or a court of law and is thereby contractually reduced to a fixed payment schedule, the judgment would be a financial asset. ##### [860-10-55-11](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:83c313576119b6621fcffd377037b0cc7dad8f735074ea816b0e7f9872e61fb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A judgment from litigation is a financial asset if it is transferred to an unrelated third party and would be within the scope of this Subtopic only if that judgment is enforceable by a government or a court of law and has been contractually reduced to a fixed payment schedule. ##### [860-10-55-12](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6cfcc5feab9405bfaf82e148c24ac95e0fe96772afa15167c30bd1f6ef30137e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A forward contract to purchase or sell a financial instrument that must be (or may be) net settled or physically settled by exchanging that financial instrument for cash (or some other financial asset) is a financial asset or [financial liability](https://asc.understandingaccounting.org/glossary/f/#financial-liability "A contract that imposes on one entity an obligation to do either of the following:Deliver cash or another financial instrument to a second entity Exchange other financial instruments on potentially unfavorable terms with the second entity."). Therefore, because a forward contract on a financial instrument that must be (or may be) physically settled by the delivery of that financial instrument in exchange for cash is a financial asset or financial liability, the transfer of such a financial asset is within the scope of this Subtopic (see paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) for guidance on extinguishments of liabilities). ##### [860-10-55-13](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:913536682fbeda80e11e55255c47ebebbd6059c7b5bd05d30d51dea86e820f89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An ownership interest in a consolidated subsidiary is evidence of control of the entity's individual assets and liabilities, not all of which are financial assets, and this guidance only applies to transfers of financial assets. (Note that in the parent's \[transferor's\] consolidated financial statements, the subsidiary's holdings are reported as individual assets and liabilities instead of as a single investment.) The guidance in this Subtopic does not apply to a transfer of an ownership interest in a consolidated subsidiary by its parent if that consolidated subsidiary holds nonfinancial assets. ##### [860-10-55-14](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:a3dbd097283f169e21b1dcfa1095d634aaf5267526611c26f3def1d2bd5bf2cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity (for example, a broker-dealer or an investment company) that carries an investment in a subsidiary at fair value will realize its investment by disposing of it rather than by realizing the values of the underlying assets through operations. Therefore, a transfer of an investment in a subsidiary by that entity is a transfer of the investment (a financial asset), not the underlying assets and liabilities (which might include nonfinancial assets). Generally, the guidance in this Subtopic applies to a transfer of an investment in a controlled entity that has not been consolidated by an entity because that entity accounts for its investment in the controlled entity at fair value. ##### [860-10-55-14A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-14A) Pending content: yes Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:a6ac3c10e73c50c35196a7ab5641ac9b376ddc409b7921c67bbf2f581b643d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)An entity may have an unconditional right to consideration from a customer that gives rise to a receivable before the entity transfers control of a good or service to the customer. A receivable recognized in accordance with paragraph [606-10-45-4](https://asc.understandingaccounting.org/asc/606/10/#606-10-45-4) that meets the definition of a financial asset is subject to the requirements of this Subtopic. ##### [860-10-55-15](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-15) Pending content: yes Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:841baadc5dd18b46eb13ce7eee90ff4c4f87d072a7ff06d2a937fecd3decbf36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reacquisition by an entity of its own securities by exchanging noncash financial assets (for example, U.S. Treasury bonds or shares of an unconsolidated investee) for its common shares constitutes a distribution by an entity to its owners, as defined in FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, is excluded from the scope of this Subtopic. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [105-10-65-9](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-9)A reacquisition by an entity of its own securities by exchanging noncash financial assets (for example, U.S. Treasury bonds or shares of an unconsolidated investee) for its common shares constitutes a distribution by an entity to its owners and, therefore, is excluded from the scope of this Subtopic. ##### [860-10-55-16](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:7e048c26bcd9cbb94ccfe9047ddd9006a5171c367654ae1a88a586bbd803f8d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [transferor's](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.") exchange of one form of beneficial interests in financial assets that have been transferred into a trust that is consolidated by the transferor for an equivalent, but different, form of beneficial interests in the same transferred financial assets would not be a transfer under this Subtopic if the exchange is with the trust that initially issued the beneficial interests. If the exchange is not a transfer, then the provisions of paragraph [860-20-40-1B](https://asc.understandingaccounting.org/asc/860/20/#860-20-40-1B) would not be applied to the transaction. ##### [860-10-55-17](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:685d4d53592fd9d1820eac4dc5e5cedb332b8b1c421df3e30255c582db07e0d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transfer of financial assets under a [dollar-roll repurchase agreement](https://asc.understandingaccounting.org/glossary/d/#dollar-roll-repurchase-agreement "An agreement to sell and repurchase similar but not identical securities. The securities sold and repurchased are usually of the same issuer. Dollar rolls differ from regular repurchase agreements in that the securities sold and repurchased have all of the following characteristics: They are represented by different certificates. They are collateralized by different but similar mortgage pools (for example, conforming single-family residential mortgages). They generally have different principal amounts. Fixed coupon and yield maintenance dollar agreements comprise the most common agreement variations. In a fixed coupon agreement, the seller and buyer agree that delivery will be made with securities having the same stated interest rate as the interest rate stated on the securities sold. In a yield maintenance agreement, the parties agree that delivery will be made with securities that will provide the seller a yield that is specified in the agreement.") is within the scope of this Subtopic if that agreement arises in connection with a transfer of existing securities. In contrast, dollar-roll repurchase agreements for which the underlying securities being sold do not yet exist or are to be announced (for example, to-be-announced [Government National Mortgage Association \[GNMA\] rolls](https://asc.understandingaccounting.org/glossary/g/#government-national-mortgage-association-rolls "The term Government National Mortgage Association (GNMA) rolls has been used broadly to refer to a variety of transactions involving mortgage-backed securities, frequently those issued by the GNMA. There are four basic types of transactions: Type 1. Reverse repurchase agreements for which the exact same security is received at the end of the repurchase period (vanilla repo) Type 2. Fixed coupon dollar reverse repurchase agreements (dollar repo) Type 3. Fixed coupon dollar reverse repurchase agreements that are rolled at their maturities, that is, renewed in lieu of taking delivery of an underlying security (GNMA roll) Type 4. Forward commitment dollar rolls (also referred to as to-be-announced GNMA forward contracts or to-be-announced GNMA rolls), for which the underlying security does not yet exist.")) are outside the scope of this Subtopic because those transactions do not arise in connection with a transfer of recognized financial assets. See paragraph [860-10-55-60](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-60) for related guidance. ##### [860-10-55-17A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:53c8fa4007921643a69ead82e6dfdef6db44299095f6ce6c541275ab9f189a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose of this implementation guidance is to illustrate the characteristics of a transaction comprising an initial transfer and a [repurchase financing](https://asc.understandingaccounting.org/glossary/r/#repurchase-financing "A repurchase agreement that relates to a previously transferred financial asset between the same counterparties (or consolidated affiliates of either counterparty) that is entered into contemporaneously with, or in contemplation of, the initial transfer.") and to preclude an analogy to other financing transactions that are outside the scope of the guidance in paragraph [860-10-40-4C](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4C), which states that items (b) through (c) in paragraph [860-10-40-4](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4) do not apply to a transfer of financial assets and a related repurchase financing. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B42CBD2A-E4B0-4767-841E-F86D4DA7906C-low.gif) Transfer of a Financial Asset Initial Transferor a Cash Initial transferee Transfer of a Financial Asset b (as collateral) Cash c Return of Financial Asset Cash ##### [860-10-55-17B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:45a3c88496d2722c68685386ae39b46a3701d74eea486b6cd316898413cb9f98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The diagram in the preceding paragraph depicts the following three transfers of a financial asset that typically occur in the transactions within the scope of the guidance in paragraph [860-10-40-4C](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4C): 1. a The initial transferor transfers a financial asset to the initial transferee in return for cash. 2. b The initial transferee enters into a repurchase financing with the initial transferor. The initial transferee transfers the previously transferred financial asset to the initial transferor as collateral for the financing. The initial transferee receives cash from the initial transferor. As part of the repurchase financing, the initial transferee is obligated to repurchase the financial asset (or substantially the same financial asset) at a fixed price within a prescribed time period. 3. c The initial transferee makes the required payment to the initial transferor under the terms of the repurchase financing. Upon receipt of payment, the initial transferor returns the transferred asset (or substantially the same asset) to the initial transferee. ##### [860-10-55-17C](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17C) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:fbaa0c13173a724be532c85d1e350b2725a6f0807c0772871455416d1935cfb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether or not the parties agree to net settle the steps in items (a) and (b) of the preceding paragraph shall not affect whether the transactions are within the scope of the guidance for repurchase financings in paragraph [860-10-40-4C](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4C). ##### [860-10-55-17D](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17D) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:e283c34c83303a3beda33dbfd6d3c0d52285e9c16ae5dc41ad6f536bf5cb6892 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-40-4](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4) states that the determination of whether a transferor and its [consolidated affiliates](https://asc.understandingaccounting.org/glossary/c/#consolidated-affiliate "An entity whose assets and liabilities are included in the consolidated, combined, or other financial statements being presented.") included in the financial statements being presented have surrendered control over transferred financial assets shall first consider whether the transferee would be consolidated by the transferor.If all other provisions of this Topic are met with respect to a particular transfer, and the transferee would be consolidated by the transferor, then the transferred financial assets would not be treated as having been sold in the financial statements being presented. However, if the transferee is a consolidated subsidiary of the transferor (its parent), the transferee shall recognize the transferred financial assets in its separate entity financial statements, unless the nature of the transfer is a secured borrowing with a pledge of collateral (for example, a repurchase agreement that would not be accounted for as a sale under the provisions of paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). ##### [860-10-55-17E](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17E) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:89dd66a9cec0b53bef2575eb93926f97ac0c92d7d81fa6618e28df5547a5b694 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of what constitutes an entire financial asset. ##### [860-10-55-17F](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17F) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:a2d49855ba983b1e6435e9decf985251918820131e5c1462c9351469517126de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A loan to one borrower in accordance with a single contract that is transferred to a securitization entity before securitization shall be considered an entire financial asset. Similarly, a beneficial interest in securitized financial assets after the securitization process has been completed shall be considered an entire financial asset. In contrast, a transferred interest in an individual loan shall not be considered an entire financial asset; however, if the transferred interest meets the definition of a [participating interest](https://asc.understandingaccounting.org/glossary/p/#participating-interest "Paragraph 860-10-40-6A defines the term participating interest."), the participating interest would be eligible for sale accounting. ##### [860-10-55-17G](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17G) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b5db0cff23f0ac1921ca12342c42a9ce736b6fde1f9704522e22271f908765b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a transaction in which the transferor creates an interest-only strip from a loan and transfers the interest-only strip, the interest-only strip does not meet the definition of an entire financial asset (and an interest-only strip does not meet the definition of a participating interest; therefore, sale accounting would be precluded). In contrast, if an entire financial asset is transferred to a securitization entity that it does not consolidate and the transfer meets the conditions for sale accounting, the transferor may obtain an interest-only strip as proceeds from the sale. An interest-only strip received as proceeds of a sale is an entire financial asset for purposes of evaluating any future transfers that could then be eligible for sale accounting. ##### [860-10-55-17H](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17H) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:66cf2233ab0a4b579a351f0c547a2eca307d1424df8b820be86dc48063769cdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If multiple advances are made to one borrower in accordance with a single contract (such as a line of credit, credit card loan, or a construction loan), an advance on that contract would be a separate unit of account if the advance retains its identity, does not become part of a larger loan balance, and is transferred in its entirety. However, if the transferor transfers an advance in its entirety and the advance loses its identity and becomes part of a larger loan balance, the transfer would be eligible for sale accounting only if the transfer of the advance does not result in the transferor retaining any interest in the larger balance or if the transfer results in the transferor's interest in the larger balance meeting the definition of a participating interest. Similarly, if the transferor transfers an interest in an advance that has lost its identity, the interest must be a participating interest in the larger balance to be eligible for sale accounting. ##### [860-10-55-17I](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17I) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:95b403b1d2585463483e36c244d317e9aa14a47e22af444c517dcab15291abb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-40-6A(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A) states that an allocation of specified cash flows precludes a portion from meeting the definition of a participating interest unless each cash flow is proportionately allocated to the participating interest holders. Following are several examples implementing that guidance: 1. a In the circumstance of an individual loan in which the borrower is required to make a contractual payment that consists of a principal amount and interest amount on the loan, the transferor and transferee shall share in the principal and interest payments on the basis of their proportionate ownership interest in the loan. 2. b In contrast, if the transferor is entitled to receive an amount that represents the principal payments and the transferee is entitled to receive an amount that represents the interest payments on the loan, that arrangement would not be consistent with the participating interest definition because the transferor and transferee do not share proportionately in the cash flows received from the loan. 3. c In other circumstances, a transferor may transfer a portion of an individual loan that represents either a senior interest or a junior interest in an individual loan. In both of those circumstances, the transferor would account for the transfer as a secured borrowing because the senior interest or junior interest in the loan do not meet the requirements to be participating interests (see paragraph [860-10-40-6A(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A)). ##### [860-10-55-17J](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17J) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6d66f4e3623ce27e87ffef88d6ab8b9a548f0c9d90015068e6486efef09c11aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Given the conditions in paragraph [860-10-40-6A(b)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A), cash flows allocated as compensation for services performed that are significantly above an amount that would fairly compensate a substitute service provider would result in a disproportionate division of cash flows of the entire financial asset among the participating interest holders and, therefore, would preclude the portion of a transferred financial asset from meeting the definition of a participating interest. Examples of cash flows that are compensation for services performed include all of the following: 1. a [Loan origination fees](https://asc.understandingaccounting.org/glossary/l/#loan-origination-fees "Origination fees consist of all of the following: Fees that are being charged to the borrower as prepaid interest or to reduce the loan's nominal interest rate, such as interest buy-downs (explicit yield adjustments) Fees to reimburse the lender for origination activities Other fees charged to the borrower that relate directly to making the loan (for example, fees that are paid to the lender as compensation for granting a complex loan or agreeing to lend quickly) Fees that are not conditional on a loan being granted by the lender that receives the fee but are, in substance, implicit yield adjustments because a loan is granted at rates or terms that would not have otherwise been considered absent the fee (for example, certain syndication fees addressed in paragraph 310-20-25-19) Fees charged to the borrower in connection with the process of originating, refinancing, or restructuring a loan. This term includes, but is not limited to, points, management, arrangement, placement, application, underwriting, and other fees pursuant to a lending or leasing transaction and also includes syndication and participation fees to the extent they are associated with the portion of the loan retained by the lender.") paid by the borrower to the transferor 2. b Fees necessary to arrange and complete the transfer paid by the transferee to the transferor 3. c Fees for servicing the financial asset. ##### [860-10-55-17K](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17K) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:e28318fb7274c8d45ed0452c8dc5fd481e5e66a17a3d121a10037c3bd1348631 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The transfer of a portion of an entire financial asset may result in a gain or loss on the transfer if the contractual interest rate on the entire financial asset differs from the market rate at the time of transfer. Paragraph [860-10-40-6A(b)(2)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A) precludes a portion from meeting the definition of a participating interest if the transfer results in the transferor receiving an ownership interest in the financial asset that permits it to receive disproportionate cash flows. For example, if the transferor transfers an interest in an entire financial asset and the transferee agrees to incorporate the excess interest (between the contractual interest rate on the financial asset and the market interest rate at the date of transfer) into the contractually specified servicing fee, the excess interest would likely result in the conveyance of an interest-only strip to the transferor from the transferee. An interest-only strip would result in a disproportionate division of cash flows of the financial asset among the participating interest holders and would preclude the portion from meeting the definition of a participating interest. ##### [860-10-55-17L](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17L) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:d785ca929cfae397267c40eda91bd13414dffaf5c164b6f3fed9175c5d31aaf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-40-6A(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A) addresses the priority of cash flows. In certain transfers, recourse is provided to the transferee that requires the transferor to reimburse any premium paid by the transferee if the underlying financial asset is prepaid within a defined time frame of the transfer date. Such recourse would preclude the transferred portion from meeting the definition of a participating interest. However, once the recourse provision expires, the transferred portion shall be reevaluated to determine if it meets the participating interest definition. ##### [860-10-55-17M](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17M) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:d54613075f804cc70c59790e8c81f1d5f6d1f6b265a385d77b16e183260947d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-40-6A(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A) addresses recourse in a participating interest. Recourse in the form of an independent third-party guarantee shall be excluded from the evaluation of whether the participating interest definition is met. Similarly, cash flows allocated to a third-party guarantor for the guarantee fee shall be excluded from the determination of whether the cash flows are divided proportionately among the participating interest holders. ##### [860-10-55-17N](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-17N) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:cff20c3420bd9ef4a1c0cc5c064b77ec459acca75de45a5a8c26f138fa0fdc53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of [standard representations and warranties](https://asc.understandingaccounting.org/glossary/s/#standard-representations-and-warranties "Representations and warranties that assert the financial asset being transferred is what it is purported to be at the transfer date.") (as used in paragraph [860-10-40-6A(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A)) include representations and warranties about any of the following: 1. a The characteristics, nature, and quality of the underlying financial asset, including any of the following: 1. 1 Characteristics of the underlying borrower 2. 2 The type and nature of the collateral securing the underlying financial asset. 2. b The quality, accuracy, and delivery of documentation relating to the transfer and the underlying financial asset 3. c The accuracy of the transferor's representations in relation to the underlying financial asset. ##### [860-10-55-18](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:07bb545d582d285f7de113138a10e0bac8efa5b1504f38a38a57ba530ca77d20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the isolation condition in paragraph [860-10-40-5(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5)and applies to transfers of all entities, including institutions for which the FDIC would be the receiver. ##### [860-10-55-18A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-18A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:16a1ca037cf8de76007d38d3cdf72e9177709a5ba8c9b660b024b771aece55ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the context of U.S. bankruptcy laws, a true sale opinion from an attorney is often required to support a conclusion that transferred financial assets are isolated from the transferor, any of its consolidated affiliates included in the financial statements being presented, and its creditors. In addition, a nonconsolidation opinion is often required if the transfer is to an affiliated entity. In the context of U.S. bankruptcy laws: 1. a A true sale opinion is an attorney's conclusion that the transferred financial assets have been sold and are beyond the reach of the transferor's creditors and that a court would conclude that the transferred financial assets would not be included in the transferor's bankruptcy estate. 2. b A nonconsolidation opinion is an attorney's conclusion that a court would recognize that an entity holding the transferred financial assets exists separately from the transferor. Additionally, a nonconsolidation opinion is an attorney's conclusion that a court would not order the substantive consolidation of the assets and liabilities of the entity holding the transferred financial assets and the assets and liabilities of the transferor (and its consolidated affiliates included in the financial statements being presented) in the event of the transferor's bankruptcy or receivership. ##### [860-10-55-18B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-18B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:26a12135a29611e09ffb2aa0395c5401ff1fa36a51edfde119b6571d0b841339 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A legal opinion may not be required if a transferor has a reasonable basis to conclude that the appropriate legal opinion(s) would be given if requested. For example, the transferor might reach a conclusion without consulting an attorney if either of the following conditions exists: 1. a The transfer is a routine transfer of financial assets that does not result in any continuing involvement by the transferor. 2. b The transferor had experience with other transfers with similar facts and circumstances under the same applicable laws and regulations. ##### [860-10-55-18C](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-18C) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:29eb5d941008b604311b4a363fee5227457b8d6d81a58a0fc2786ec6a25d7c30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For entities that are subject to other possible bankruptcy, conservatorship, or other receivership procedures (for example, banks subject to receivership by the Federal Deposit Insurance Corporation \[FDIC\]) in the United States or other jurisdictions, judgments about whether transferred financial assets have been isolated shall be made in relation to the powers of bankruptcy courts or trustees, conservators, or receivers in those jurisdictions. ##### [860-10-55-19](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:26b5eacc03b6e429e66df72a8e00776ba07ec4f4ccd28a986a8ce22b38241b9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In certain securitizations, a corporation that, if it failed, would be subject to the U.S. Bankruptcy Code transfers financial assets to a securitization entity in exchange for cash. The entity raises that cash by issuing to investors beneficial interests that pass through all cash received from the financial assets, and the transferor has no further involvement with the trust or the transferred financial assets. Those securitizations generally would be judged as having isolated the assets because, in the absence of any continuing involvement there would be reasonable assurance that the transfer would be found to be a true sale at law that places the assets beyond the reach of the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, and its creditors, even in bankruptcy or other receivership. ##### [860-10-55-20](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:91516751e5369ec087ffcf5c348e45acdea56c1994535d1c83715ee37f5a320e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In other securitizations, a similar corporation transfers financial assets to a securitization entity in exchange for cash and beneficial interests in the transferred financial assets. That entity raises the cash by issuing to investors commercial paper that gives them a senior beneficial interest in cash received from the financial assets. The beneficial interests obtained by the transferring corporation represent a junior interest to be reduced by any credit losses on the financial assets in the entity. The senior beneficial interests (commercial paper) are highly rated by credit rating agencies only if both the credit enhancement from the junior interest is sufficient and the transferor is highly rated. ##### [860-10-55-21](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:dc677eef9066cfcca83ce0e722036e84a17add187c684f01562f5ea8273748e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on facts and circumstances, those single-step securitizations often would be judged in the United States as not having isolated the financial assets, because the nature of the continuing involvement may make it difficult to obtain reasonable assurance that the transfer would be found to be a true sale at law that places the financial assets beyond the reach of the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, and its creditors in U.S. bankruptcy (see paragraph [860-10-55-46](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-46)). If the transferor fell into bankruptcy and the transfer was found not to be a true sale at law, investors in the transferred financial assets might be subjected to an automatic stay that would delay payments due them, and they might have to share in bankruptcy expenses and suffer further losses if the transfer was recharacterized as a secured loan. ##### [860-10-55-22](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:195476b4f98504ce3360652a93b2a8fac2da007a5cb97f1388b2ce4730cbe2f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other securitizations use multiple transfers intended to isolate transferred financial assets beyond the reach of the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, and its creditors, even in bankruptcy. The series of transactions in a typical two-tier structure taken as a whole may satisfy the isolation test because the design of the structure achieves isolation. The two-step securitizations, taken as a whole, generally would be judged under present U.S. law as having isolated the financial assets beyond the reach of the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, and its creditors, even in bankruptcy or other receivership. However, each entity involved in a transfer should be evaluated under the consolidation guidance in Topic 810. Accordingly, a transferor could be required to consolidate the trust or other legal vehicle used in the second step of the securitization, notwithstanding the isolation analysis of the transfer. ##### [860-10-55-23](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b4ee665d5f95bd1611f5071690cdb59b0c40e49c48386a7976aafbd2c4e522e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, two-step structures involve the following: 1. a First, the corporation transfers a group of financial assets to a special-purpose corporation that, although wholly owned, is so designed that the possibility is remote that the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, or its creditors could reclaim the financial assets. This first transfer is designed to be judged to be a true sale at law, in part because the transferor does not provide excessive credit or yield protection to the special-purpose corporation, and the transferred financial assets are likely to be judged beyond the reach of the transferor, its consolidated affiliates (that are not bankruptcy-remote entities) included in the financial statements being presented, or the transferor's creditors even in bankruptcy or other receivership. 2. b Second, the special-purpose corporation transfers a group of financial assets to a trust or other legal vehicle with a sufficient increase in the credit or yield protection on the second transfer (provided by a transferor's junior beneficial interest or other means) to merit the high credit rating sought by third-party investors who buy senior beneficial interests in the trust. Because of that aspect of its design, that second transfer might not be judged to be a true sale at law and, thus, the transferred financial assets could at least in theory be reached by a bankruptcy trustee for the special-purpose corporation. 3. c However, the special-purpose corporation is designed to make remote the possibility that it would enter bankruptcy, either by itself or by substantive consolidation into a bankruptcy of its parent should that occur. For example, its charter forbids it from undertaking any other business or incurring any liabilities, so that there can be no creditors to petition to place it in bankruptcy. Furthermore, its dedication to a single purpose is intended to make it extremely unlikely, even if it somehow entered bankruptcy, that a receiver under the U.S. Bankruptcy Code could reclaim the transferred financial assets because it has no other assets to substitute for the transferred financial assets. ##### [860-10-55-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6dfb827d1698eca1f40d74d32dcb559dd8d0fc8b72a45be7eccfb5d62fd94ceb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The powers of receivers for entities not subject to the U.S. Bankruptcy Code (for example, banks subject to receivership by the Federal Deposit Insurance Corporation \[FDIC\]) vary considerably, and therefore some receivers may be able to reach financial assets transferred under a particular arrangement and others may not. A securitization may isolate transferred financial assets from a transferor subject to such a receiver and its creditors even though it is accomplished by only one transfer directly to a securitization entity that issues beneficial interests to investors and the transferor provides credit or yield protection. For entities that are subject to other possible bankruptcy, conservatorship, or other receivership procedures in the United States or other jurisdictions, judgments about whether transferred financial assets have been isolated need to be made in relation to the powers of bankruptcy courts or trustees, conservators, or receivers in those jurisdictions. ##### [860-10-55-24A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-24A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:4c44cebe1143fbffe4a28f216c0d11a274057e3fea38ad895ecc47601b8f3a85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on the facts and circumstances, transferred financial assets can be isolated from the transferor if the Federal Deposit Insurance Corporation (FDIC) would be the receiver should the transferor fail. In July 2000, the FDIC adopted a final rule (subsequently amended), _Treatment by the Federal Deposit Insurance Corporation as Conservator or Receiver of Financial Assets Transferred by an Insured Depository Institution in Connection with a Securitization or Participation._ The final amended rule modifies the FDIC's receivership powers so that, subject to certain conditions, it shall not recover, reclaim, or recharacterize as property of the institution or the receivership any financial assets transferred by an insured depository institution that meet all conditions for sale accounting treatment under GAAP, other than the _legal isolation_ condition in connection with a securitization or participation. ##### [860-10-55-24B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-24B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:7f74b7c60d5bd6ad67f23d94697ccfb8853511c3289547855d67bbc930e9fbda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Financial assets transferred by an entity subject to possible receivership by the FDIC are isolated from the transferor if the FDIC or another creditor either cannot require return of the transferred financial assets or can only require return in receivership, after a default, and in exchange for payment of, at a minimum, principal and interest earned (at the contractual yield) to the date investors are paid. ##### [860-10-55-25](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:40ef39df11abae4c4afe35c4bb7884e3e198d49bae8781adc1413cd6232a6419 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Conversely, financial assets transferred by an entity shall not be considered isolated from the transferor if circumstances can arise under which the transferor can require their return, but only in exchange for payment of principal and interest earned (at the contractual yield) to the date investors are paid, unless the transferor's power to require the return of the transferred financial assets arises solely from a contract with the transferee. A noncontractual power to require the return of transferred assets is inconsistent with the limitations in paragraph [860-10-40-5(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) that, to be accounted for as having been sold, transferred financial assets shall be isolated from the transferor. That is the circumstance even if the noncontractual power appears unlikely to be exercised or is dependent on the uncertain future actions of other entities (for example, insufficiency of collections on underlying transferred financial assets or determinations by court of law). Under that guidance, a single-step securitization commonly used by financial institutions subject to receivership by the FDIC and sometimes used by other entities is likely not to be judged as having isolated the assets. One reason for that is because it would be difficult to obtain reasonable assurance that the transferor would be unable to recover the transferred financial assets under the [equitable right of redemption](https://asc.understandingaccounting.org/glossary/e/#equitable-right-of-redemption "The right of a property owner who has defaulted on a secured obligation to recover the securing property before its sale by paying the amounts due and any appropriate fees and charges. Other creditors of or a receiver for the property owner also may be able to exercise that right. After a transfer of a financial asset, a right of redemption may allow the transferor to buy back the transferred asset.") available to secured debtors, after default, under U.S. law. ##### [860-10-55-25A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-25A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6c827e454018f842504c0e005f0625c04278cf6194e3982ba6eae2c0593d1f2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For entities that are subject to possible receivership under jurisdictions other than the FDIC or the U.S. Bankruptcy Code, whether assets transferred by an entity can be considered isolated from the transferor depends on the circumstances that apply to those types of entities. As discussed in paragraph [860-10-55-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-24), for entities that are subject to other possible bankruptcy, conservatorship, or other receivership procedures in the United States or other jurisdictions, judgments about whether transferred financial assets have been isolated need to be made in relation to the powers of bankruptcy courts or trustees, conservators, or receivers in those jurisdictions. The same sorts of judgments may need to be made in relation to powers of the transferor or its creditors. ##### [860-10-55-26](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:1bfcba900f8b345a06053067072e99d730d1149860ea7407091f946099a7f0bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides implementation guidance on the application of the condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) related to the transferee's right to pledge or exchange transferred assets in certain circumstances and transactions, specifically: 1. a Transferee is precluded from exchanging the transferred financial assets but has the unconstrained right to pledge them. 2. b Transferee is significantly limited in its ability to pledge or exchange the transferred financial assets. 3. c Transferor's approval is required for transferee's subsequent transfers or pledges. 4. d Transactions involving Rule 144A securities. ##### [860-10-55-27](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:0f32c6d387bab29653f641191971aec5242a61352487f3a1da36ba4851522adf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a transaction in which a transferee (that is not an entity whose sole purpose is to engage in securitization or asset-backed financing activities) is precluded from exchanging the transferred financial assets but obtains the unconstrained right to pledge them, the determination of whether the sale condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) is met depends on the facts and circumstances. In a transfer of financial assets, a transferee's right to both pledge and exchange transferred financial assets suggests that the transferor has surrendered its control over those financial assets. However, more careful analysis is warranted if the transferee may only pledge the transferred financial assets. ##### [860-10-55-28](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b6f553b9d52d0a4864d6d76b9ea0b72a4786ae612f60a26adb02cbb70ab157a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity transfers financial assets to a transferee that is significantly limited in its ability to pledge or exchange the transferred financial assets (the transferee is not an entity whose sole purpose is to engage in securitization or asset-backed financing activities). The transferor receives cash in return for the transferred financial assets, and 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 assets. The transfer described in this example meets the condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). ##### [860-10-55-29](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:feef0aeda7dd39c3ddd2c3ca3ea60ba5e0f41ba5110590a98571220d41657802 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While the condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) is met in the example described in the previous paragraph, in general, for transfers in which the transferor does have any continuing involvement, an evaluation shall be made as to whether the condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) has been met. ##### [860-10-55-30](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:9d071860107920d78e2d66c5b099cb9c898b8cf33e6ff91d169cf9cbc8c3f53d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a transfer to fail to meet the condition in paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5), the transferee must be constrained from pledging or exchanging the transferred financial asset and the transferor must receive more than a trivial benefit as a result of the constraint. ##### [860-10-55-31](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:211e1ba9627cfcbf891a0094472dbd1054349e3e1074285d04f842527e637bb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Judgment is necessary to determine whether a requirement to obtain the transferor's permission to sell or exchange should preclude sale accounting. For example, in certain [loan participation](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.") agreements involving transfers of participating interests, the transferor is required to approve any subsequent transfers or pledges of the interests in the loans held by the transferee. Whether that requirement would be a constraint that would prevent the transferee from taking advantage of its right to pledge or to exchange the transferred financial asset and, therefore, accounting for the transfer as a sale, depends on the nature of the requirement for approval. ##### [860-10-55-32](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:cf0d63a9c00f964cdf49921d570c07dffc04c3605aed43a7de3844aca9190675 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A prohibition on sale to the transferor's competitor may or may not constrain a transferee from pledging or exchanging the financial asset, depending on how many other potential buyers exist. If there are many other potential willing buyers, the prohibition would not be constraining. In contrast, if that competitor were the only potential willing buyer (other than the transferor), then the condition would be constraining. ##### [860-10-55-33](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:fc976222fc7e07dc297ec65a0ae12ab9a4ab24ae1156b4c915f26113825c2d9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Issuing beneficial interests in the form of securities issued under Rule 144A presumptively would not constrain a transferee's ability to transfer those beneficial interests for purposes of this Subtopic. The primary limitation imposed by Rule 144A is that a potential buyer must be a sophisticated investor. If a large number of qualified buyers exist, the holder could transfer those securities to many potential buyers and, thereby, realize the full economic benefit of the assets. In such circumstances, the requirements of Rule 144A would not be a constraint that precludes sale accounting under paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). ##### [860-10-55-34](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:7a6b1a71ad9f6de80906022c68e3d971fad1a139602dd333363fcbb5d24321d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides implementation guidance related to the effective control condition and related examples in paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5), specifically: 1. a An agreement that both entitles and obligates the transferor to repurchase or redeem the transferred financial assets before their maturity (see paragraph [860-10-40-5(c)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5)): 1. 1 Whether [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.") exchanged are substantially the same 2. 2 [Subparagraph superseded by Accounting Standards Update No. 2011-03](https://asc.understandingaccounting.org/updates/asu-2011-03/). 2. b An agreement that provides the transferor with the [unilateral ability](https://asc.understandingaccounting.org/glossary/u/#unilateral-ability "A capacity for action not dependent on the actions (or failure to act) of any other party.") to cause the holder to return specific financial assets, other than through a cleanup call (see paragraph [860-10-40-5(c)(2)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5)): 1. 1 Rights to reacquire (call) transferred assets. 3. c An agreement that permits the transferee to require the transferor to repurchase the transferred financial asset at a price that is so favorable to the transferee that it is probable that the transferee will require the transferor to repurchase the transferred financial asset. ##### [860-10-55-35](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ee52829acf3ad9594a7a57ecd561c87008002326bd565f2b184e16724f190a91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses criteria that must be met for a transfer to fail the condition in paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) through an agreement of the type described in paragraph [860-10-40-5(c)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5), precluding sale accounting and resulting, instead, in secured-borrowing accounting. The following are examples of whether securities exchanged are substantially the same as discussed in paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24): 1. a The same primary obligor (see paragraph [860-10-40-24(a)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). The exchange of pools of single-family loans would not meet this criterion because the mortgages comprising the pool do not have the same primary obligor, and would therefore not be considered substantially the same. 2. b Identical form and type (see paragraph [860-10-40-24(a)(2)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). The following exchanges would not meet this criterion: 1. 1 GNMA I securities for GNMA II securities 2. 2 Loans to foreign debtors that are otherwise the same except for different U.S. foreign tax credit benefits (because such differences in the tax receipts associated with the loans result in instruments that vary in form and type) 3. 3 Commercial paper for redeemable preferred stock. 3. c The same maturity (or in the case of mortgage-backed pass-through and pay-through securities, similar remaining weighted-average maturities that result in approximately the same market yield) (see paragraph [860-10-40-24(a)(3)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). The exchange of a fast-pay GNMA certificate (that is, a certificate with underlying mortgage loans that have a high prepayment record) for a slow-pay GNMA certificate would not meet this criterion because differences in the expected remaining lives of the certificates result in different market yields. 4. d Similar assets as [collateral](https://asc.understandingaccounting.org/glossary/c/#collateral "Personal or real property in which a security interest has been given.") (see paragraph [860-10-40-24(a)(5)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). Mortgage-backed pass-through and pay-through securities must be collateralized by a similar pool of mortgages, such as single-family residential mortgages, to meet this characteristic. ##### [860-10-55-36](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:89f3a6870bc97ab742d0190848ba5f9d345c49d0671b475cc22bae8e6b989ada Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 860-10-55-36 through 55-38 superseded by Accounting Standards Update No. 2011-03](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-36). ##### [860-10-55-39](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6ab7ea54b91909e02ac697e38f052b5236c3d29fbefc69b1f76056240a0e2a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Rights or obligations to reacquire transferred financial assets may result in the transferor's maintaining effective control over the transferred assets, therefore precluding sale accounting under paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). The following guidance addresses how different types of rights of a transferor to reacquire (call) transferred assets affect sale accounting, specifically: 1. a Removal-of-accounts provisions (see paragraphs [860-10-40-36 through 40-39](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-36) ) 2. b Call options (see paragraphs [860-10-40-28](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-28) and [860-10-40-34](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-34)) 3. c Other arrangements. ##### [860-10-55-40](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:1ea6cfd3a8d0437f379b2d80abc18cb0d7a7609b5cb610deb4dcd0026c293869 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/). ##### [860-10-55-41](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:c6d6effc7edfc08e23d36bdd3c9c4d772ce157a6788a5da00775a5ac16f83a88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of application of effective control principles to removal-of-accounts provisions: 1. a An unconditional removal-of-accounts provision that allows the transferor to specify the financial assets that may be removed from a group of financial assets precludes sale accounting for all financial assets in the group that might be specified if such a provision allows the transferor unilaterally to remove specific financial assets and provides a more-than-trivial benefit to the transferor (see paragraph [860-10-40-37(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-37)), even if the transferor's right to remove specific financial assets from a group of transferred financial assets is limited, for example, to 10 percent of the fair value of the financial assets transferred and all of the financial assets are smaller than that 10 percent. In that circumstance, none of the transferred financial assets would be derecognized at the time of transfer because no transferred financial asset is beyond the reach of the transferor. If the transferor reclaims all the financial assets it can and thereby extinguishes its option, its control has expired and the rest of the financial assets have been sold at that time. 2. b A removal-of-accounts provision that provides the right to random removal of excess financial assets from a group of transferred financial assets up to 10 percent of the fair value of the financial assets transferred (all financial assets in the group are less than this 10 percent of the fair value of transferred financial assets) does not preclude sale accounting if the transferor has no other interest in the group. The transferor has, in essence, obtained a 10 percent beneficial interest in the group and should account for it as such. This treatment is permitted because the removal-of-accounts provision is sufficiently limited and the transferor cannot unilaterally remove specific transferred financial assets, because the timing of the removal (when the excess develops) and the assets being removed (which are randomly determined) are not under the control of the transferor (see paragraph [860-10-40-38](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-38)). 3. c A removal-of-accounts provision conditioned on a transferor's decision to exit some portion of its business precludes sale accounting for all financial assets that might be affected, because it permits the transferor unilaterally to remove specific financial assets and provides a more-than-trivial-benefit to the transferor (see paragraph [860-10-40-37(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-37)). 4. d A removal-of-accounts provision for defaulted receivables does not preclude sale accounting at the time of transfer, because the removal would be allowed only after a third party's action (default) and could not be caused unilaterally by the transferor (see paragraph [860-10-40-38(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-38)). However, once the default has occurred, the transferor would have the unilateral ability to remove those specific financial assets and would need to recognize the defaulted receivable if that ability provides a more-than-trivial benefit to the transferor. 5. e A removal-of-accounts provision conditioned on a third-party cancellation, or expiration without renewal, of an affinity or private-label arrangement does not preclude sale accounting at the time of transfer, because the removal would be allowed only after a third party's action (cancellation) or decision not to act (expiration) and could not be caused unilaterally by the transferor (see paragraph [860-10-40-38(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-38)). However, once the cancellation or expiration has occurred, the transferor would have the unilateral ability to remove specific financial assets and would need to recognize those financial assets if that ability provides a more-than-trivial benefit to the transferor. 6. f Because the transferor could not cause the reacquisition unilaterally a transferor does not maintain effective control through a removal-of-accounts provision that obligates the transferor to reacquire transferred financial assets from a securitization entity only after either: 1. 1 A specified failure of the servicer to properly service the transferred financial assets that could result in the loss of a third-party guarantee 2. 2 Third-party beneficial interest holders require a securitization entity to repurchase that beneficial interest. ##### [860-10-55-42](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:1a3d513dc5861bf38ecac8e4528a8973a21a76f5aa8471bf2799061fd22a9b76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are other examples of the application of effective control principles: 1. a In a loan participation, the lead bank (that is also the transferor) allows the participating bank to resell but reserves the right to call at any time from whoever holds it and can enforce the call option by cutting off the flow of interest at the call date; such a call option precludes sale accounting. 2. b In a securitization, a call option permits the transferor to reclaim all of the transferred financial assets from the securitization entity at any time; such a call option precludes sale accounting unless both of the following conditions exist: 1. 1 The call option is an option to call, at fair value, a financial asset that is readily obtainable in the marketplace. 2. 2 The transferor does not hold a residual beneficial interest in the transferred financial assets (see paragraph [860-10-40-35](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-35)). 3. c A transferor-servicer transfers a group of entire financial assets to a securitization entity and has the right to call all of the financial assets when the group amortizes to 20 percent of its value (determined at the date of transfer). The transferor-servicer determines that at that level of financial assets, its cost of servicing them would not be burdensome in relation to the benefits of servicing, and therefore that the call option is not a cleanup call. Such a call option precludes sale accounting for the entire group of transferred financial assets (see paragraph [860-10-55-70](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-70)). 4. d If the third-party beneficial interests contain an embedded option and the transferor holds the residual interest in the securitization entity, the combination has the same kind of effective control as a scheduled auction provision if the transferor holds a residual beneficial interest. Sale accounting would be precluded for all of the transferred financial assets affected by the call option. 5. e If the third-party beneficial interests in a securitization entity pay off first (a so-called turbo structure, where principal payments and prepayments are allocated on a non-pro rata basis, as discussed in paragraph [860-10-05-13](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-13)), the transferor may not maintain effective control over transferred financial assets (see paragraph [860-10-40-32](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-32)). To some extent, these repayments are contractual cash flows of the underlying assets, but repayments also result from prepayments in the underlying assets (that is, the prepayment options in the underlying assets are mirrored in the third-party beneficial interests). In this circumstance, call options embedded in the third-party beneficial interests result from the options embedded in the underlying assets (that is, they are held by the underlying borrowers rather than the transferor), and thus do not preclude sale accounting. 6. f A transferor's contractual right to repurchase, at any time, a loan that is not a readily obtainable financial asset would preclude sale accounting, because the transferor's contractual right to repurchase is effectively a call option of the type described in paragraph [860-10-40-17(c)(2)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-17). ##### [860-10-55-42A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-42A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ff41e87194b98a50f4db41d316195e170b62b891d709b9acfceb4d16a1fa0088 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance illustrates the concept in paragraph [860-10-40-35](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-35) that a transferor maintains effective control if it has a right to reclaim specific transferred assets by paying fair value and also holds the residual interest in the transferred financial assets.If a transferor holds the residual interest in securitized financial assets and can reclaim the transferred financial assets at termination of the securitization entity by purchasing them in an auction, and thus at what might appear to be fair value, then sale accounting for the transfer of those financial assets it can reclaim would be precluded. Such circumstances provide the transferor with a more-than-trivial benefit and effective control over the financial assets, because it can pay any price it chooses in the auction and recover any excess paid over fair value through its residual interest in the transferred financial assets. ##### [860-10-55-42B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-42B) Pending content: yes Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:23151e947d2d9457460f50cf695b265fc3a735d0510e3b91f1360df0a13e037c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sale accounting is not appropriate if a cleanup call on a group of financial assets in a securitization entity is held by a party other than the servicer. A transferor's call option on the transferred financial assets in the securitization entity is not a cleanup call for accounting purposes because it is not the servicer or an affiliate of the servicer. in which the fair value of beneficial interests obtained by a transferor of financial assets that is not the servicer or an affiliate of the servicer is adversely affected by the amount of transferred financial assets declining to a low level. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [105-10-65-10](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-10)Sale accounting is not appropriate if a cleanup call on a group of financial assets in a securitization entity is held by a party other than the servicer. A transferor's call option on the transferred financial assets in the securitization entity is not a cleanup call for accounting purposes because it is not the servicer or an affiliate of the servicer. This is the case even when the fair value of beneficial interests obtained by a transferor of financial assets that is not the servicer or an affiliate of the servicer is adversely affected by the amount of transferred financial assets declining to a low level. ##### [860-10-55-42C](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-42C) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:38dd1692b310ccad7ef65a1da89dcc85cddb96278263b445c10a66bf06e25e54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a securitization transaction involving not-readily-obtainable financial assets, a transferor that is also the servicer may hold a cleanup call if it enters into a subservicing arrangement with a third party without precluding sale accounting. Under a subservicing arrangement, the transferor remains the servicer from the perspective of the securitization entity because the securitization entity does not have an agreement with the subservicer (that is, the transferor remains liable if the subservicer fails to perform under the subservicing arrangement). However, if the transferor sells the servicing rights to a third party (that is, the agreement for servicing is between the securitization entity and the third party after the sale of the servicing rights), then the transferor could not hold a cleanup call without precluding sale accounting. ##### [860-10-55-42D](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-42D) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6636912e0e8c675136cfbd104568d0a287f7635a265c5156dfa78c7f0e1100bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of paragraph [860-10-40-5(c)(3)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) through the following examples: 1. a A put option written to the transferee generally does not provide the transferor with effective control over the transferred financial asset under paragraph [860-10-40-5(c)(3)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). 2. b A put option that is sufficiently deep in the money when it is written would, under that paragraph, provide the transferor effective control over the transferred financial asset because it is probable that the transferee will exercise the option and the transferor will be required to repurchase the transferred financial asset. 3. c A sufficiently out-of-the-money put option held by the transferee would not provide the transferor with effective control over the transferred financial asset if it is probable when the option is written that the option will not be exercised. 4. d A put option held by the transferee at fair value would not provide the transferor with effective control over the transferred financial asset. ##### [860-10-55-43](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:91b940353a7fc50ac555c1d9b48d9e5f5bf06791e5fae959882fb638c5fce151 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides implementation guidance regarding the application of the sale conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) to certain transactions, specifically: 1. a Pass-through, pay-through, and [revolving-period securitizations](https://asc.understandingaccounting.org/glossary/r/#revolving-period-securitizations "Securitizations in which receivables are transferred at the inception and also periodically (daily or monthly) thereafter for a defined period (commonly three to eight years), referred to as the revolving period. During the revolving period, the special-purpose entity uses most of the cash collections to purchase additional receivables from the transferor on prearranged terms.") 2. b Factoring arrangements 3. c Transfers of receivables with recourse 4. d Securities lending transactions 5. e Repurchase agreements 6. f Wash sales 7. g Dollar rolls 8. h Loan participations 9. i Banker's acceptances and risk participations in them 10. j [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 11. k Transfers involving certain transferor powers 12. l Transferor option to repurchase individual financial assets 13. m Transfer of a short-term loan made under a long-term credit commitment 14. n Transfer of bad-debt recovery rights. 15. o [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). ##### [860-10-55-44](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:48de452a3c39c792d9f0554a52a4025cad33beeabcf3b2eb928c9e153fe81c6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [860-10-05-7 through 05-13](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-7) provide background on securitization transactions. In pass-through and pay-through securitizations, receivables are transferred to the entity at the inception of the securitization, and no further transfers are made; all cash collections are paid to the holders of beneficial interests in the entity. Pass-through, pay-through, and revolving-period securitizations that meet the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) qualify for sale accounting under this Subtopic, provided the securitization entity is not consolidated by the transferor or its consolidated affiliates in the financial statements being presented. ##### [860-10-55-45](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b791ca1c618598fb231dc2e70103c8ab933669942f50a55a28e961b9ea5b09e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-05-14](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-14) provides background on factoring arrangements. Factoring arrangements that meet the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) shall be accounted for as sales of financial assets because the transferor surrenders control over the receivables to the factor. ##### [860-10-55-46](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:f4f2d6d3170cab1a63caea22ef766e84379097142dace71b153f883f4ae2e9f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-05-15](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-15) provides background on transfers of receivables with recourse. The effect of a recourse provision on the application of paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) may vary by jurisdiction. In some jurisdictions, transfers with full recourse may not place transferred financial assets beyond the reach of the transferor, its consolidated affiliates (that are not entities designed to make remote the possibility that it would enter bankruptcy or other receivership) included in the financial statements being presented, and its creditors, but transfers with limited recourse may. 1. a Transfer consists of an entire financial asset or a group of entire financial assets. Before the method of recourse can be evaluated to determine the appropriate accounting treatment, the entity shall first determine whether a sale has occurred because in some jurisdictions recourse might mean that the transferred financial assets have not been isolated beyond the reach of the transferor, its consolidated affiliates (that are not entities designed to make remote the possibility that it would enter bankruptcy or other receivership) included in the financial statements being presented, and its creditors. A transfer of receivables in their entireties with recourse shall be accounted for as a sale, with the proceeds of the sale reduced by the fair value of the recourse obligation, if the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met. Otherwise, a transfer of receivables with recourse shall be accounted for as a secured borrowing. 2. b Transfer does not consist of an entire financial asset or a group of entire financial assets. The transferred financial asset must meet the definition of a [participating interest](https://asc.understandingaccounting.org/glossary/p/#participating-interest "Paragraph 860-10-40-6A defines the term participating interest.").A transfer of a portion of a receivable with recourse, other than that permitted in paragraph [860-10-40-6A(c)(4)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A), does not meet the requirements of a participating interest and shall be accounted for as a secured borrowing. ##### [860-10-55-47](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ba0d94a005b997df094f78ab789d993f21a4e53c578d07460085b87c40858f2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [860-20-55-24](https://asc.understandingaccounting.org/asc/860/20/#860-20-55-24) for further guidance on accounting for transfers of receivables with recourse. ##### [860-10-55-48](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ac399d15c385d66b3117c4c3d79d8839c78efc3acf171f2a7b5762c1e65e8188 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/). ##### [860-10-55-49](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:7b961fbb9563d2e4a585f7c42eabe357f98cb8dfa3810100a915bf6fcb9add24 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/). ##### [860-10-55-50](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:efd31c9592847f7708b169101a2d19f64d49ab129f3945e1476dadd30052f1e2 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/). ##### [860-10-55-51](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:5b06a3df03cde1d96fd85064bf7ab17fe03840a665b79d6e7958d0c2e82fc783 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [860-10-05-19 through 05-21](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-19) provide background on repurchase agreements. Paragraphs [860-10-05-16 through 05-18](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-16) provide background on securities lending transactions. Repurchase agreements and securities lending transactions are required to be evaluated under each of the following conditions for derecognition in accordance with paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5): 1. a Isolation. Paragraph [860-10-40-5(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) requires an assessment of whether the transferred [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.") are isolated from the transferor. Paragraphs [860-10-40-5(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) and [860-10-40-8](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-8) require that the transferred financial assets be placed beyond the reach of all consolidated affiliates, except for certain bankruptcy-remote entities, included in the financial statements being presented. 2. b Transferee's rights to pledge or exchange. Paragraph [860-10-40-5(b)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) requires an assessment of the transferee's rights to pledge or exchange the transferred financial assets. If a transferor has transferred financial assets to an independent third-party custodian, or to a transferee, under conditions that preclude the transferee from selling or repledging the assets during the term of the repurchase agreement, the transferor has not surrendered control over those assets. In a securities lending transaction, to the extent that the collateral consists of letters of credit or other financial instruments that the holder is not permitted by contract or custom to sell or repledge, the transaction does not satisfy the sale conditions and is accounted for as a loan of securities by the transferor to the transferee. 3. c Effective control. Paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) requires an assessment of whether the transferor maintains effective control over transferred financial assets. An agreement that both entitles and obligates the transferor to repurchase transferred financial assets from the transferee in accordance with paragraph [860-10-40-5(c)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) that meets the criteria in paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) maintains the transferor's effective control over transferred financial assets. Therefore, transfers with agreements to repurchase transferred financial assets that either meet the effective control criteria or qualify for the [repurchase-to-maturity transaction](https://asc.understandingaccounting.org/glossary/r/#repurchase-to-maturity-transaction "A repurchase agreement in which the settlement date of the agreement to repurchase a transferred financial asset is at the maturity date of that financial asset and the agreement would not require the transferor to reacquire the financial asset.") exception need not be assessed under the remaining conditions for derecognition and should be accounted for as a secured borrowing. Paragraph [860-10-55-51A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-51A) illustrates the application of the effective control condition in paragraph [860-10-40-5(c)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). Repurchase agreements and securities lending transactions that do not meet all the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) should be treated as secured borrowings. ##### [860-10-55-51A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-51A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:492a2a7f76fdd541dad63d572485105add8a3f6d59c78a487078cd6ceefcc761 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under certain agreements to repurchase transferred financial assets before their maturity, the transferor maintains effective control over the transferred financial assets. If effective control is maintained or the transaction qualifies for the [repurchase-to-maturity transaction](https://asc.understandingaccounting.org/glossary/r/#repurchase-to-maturity-transaction "A repurchase agreement in which the settlement date of the agreement to repurchase a transferred financial asset is at the maturity date of that financial asset and the agreement would not require the transferor to reacquire the financial asset.") exception, the agreement is accounted for as a secured borrowing. If effective control is not maintained or the repurchase-to-maturity transaction exception is not met, the transaction would be assessed under the other derecognition conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) to determine if the transferred financial asset should be derecognized and accounted for as a sale. ##### [860-10-55-51B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-51B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:6053f99eb1e2def795928daa06e263b3a3f2cda2644a905fb7d4c88c21fb3bb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following illustrates the application of the derecognition guidance in paragraphs [860-10-40-24 through 40-24A](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24): 1. a Repurchase agreements and securities lending transactions—assets that are identical. The following illustrates agreements for which the transferor maintains effective control over the transferred financial asset: 1. 1 A financial asset is transferred under a contemporaneous agreement with the same counterparty that requires the transferor to repurchase or redeem it before its maturity at a fixed price or at the sale price plus or minus a lender's return. 2. 2 A financial asset is transferred under a securities lending transaction that requires the transferee to return to the transferor the identical asset before its maturity at a fixed price. 2. b Repurchase agreements and securities lending transactions—assets that are substantially the same. The following illustrates agreements for which the transferor maintains effective control over the transferred financial asset: 1. 1 A financial asset is transferred under a contemporaneous agreement with the same counterparty to repurchase or redeem an asset that is substantially the same as the initially transferred asset (in accordance with paragraph [860-10-40-24(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)) before its maturity at a fixed price or at the sale price plus or minus a lender's return. 2. 2 A financial asset is transferred under a securities lending transaction that requires the transferee to return to the transferor an asset that is substantially the same as the initially transferred financial asset (in accordance with paragraph [860-10-40-24(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)) before its maturity at a fixed price. 3. 3 Fixed-coupon and dollar-roll repurchase agreements, and other contracts under which the securities to be repurchased are substantially the same in accordance with paragraph [860-10-40-24(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) as the securities initially transferred. 3. c Repurchase-to-maturity transactions. A repurchase-to-maturity transaction is accounted for as a secured borrowing as if it maintains the transferor's effective control over the transferred financial asset. A transfer of a financial asset with a contemporaneous total return swap to maturity does not meet the definition of _repurchase-to-maturity transaction_. 4. d Cash-settled repurchase agreements. If a financial asset is transferred under a contemporaneous agreement with the same counterparty to repurchase or redeem it before its maturity at a fixed repurchase price or a price equal to the sale price plus or minus a lender's return and the agreement requires the transferee to settle the agreement in cash, the agreement does not maintain the transferor's effective control over the transferred financial assets. An exception is a repurchase-to-maturity transaction as discussed in (c). ##### [860-10-55-52](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:3b34f1b87d38be68fe752ccb16d59d945295136c4ee5bf42ee57f49c1820046b 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/). ##### [860-10-55-53](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:c194a2bb33ab24acfc29776d54053cf37e1b590e6cfc61e6f3612befba8d47f4 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/). ##### [860-10-55-54](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:2fc55e54f993ff16a106d9028612414afdaf12b171502d4dc90ecebad796e6b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In repurchase agreements and securities lending transactions involving readily obtainable held-to-maturity debt securities, the conditions set forth in paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) should be carefully evaluated to determine whether the transaction should be accounted for as a sale or secured borrowing. For example, if the security that is required to be returned has a different maturity or has a different contractual interest rate from the transferred security, the substantially-the-same criterion would not be met. In that circumstance, effective control would not be maintained under the condition in paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) and the transfer would be accounted for as a sale if the other conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met. ##### [860-10-55-55](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:edd8e843af2d1914c50ad289e83601976f3b740caa7319d2c84a2c7413b3f549 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met, the transferor should account for the repurchase agreement as a sale of financial assets and a forward repurchase commitment, and the transferee should account for the agreement as a purchase of financial assets and a forward resale commitment. ##### [860-10-55-55A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-55A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:e8046420ca06076f11ad0a6c80092f87f672263ab9ecbbe6d1209c49e894b564 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met, a securities lending transaction should be accounted for as follows: 1. a By the transferor as a sale of the loaned securities for proceeds consisting of the cash collateral and a forward repurchase commitment. If the collateral in a transaction that meets the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) is a financial asset that the holder is permitted by contract or custom to sell or repledge, that financial asset is proceeds of the sale of the loaned securities. 2. b By the transferee as a purchase of the borrowed securities in exchange for the collateral and a forward resale commitment. During the term of that agreement, the transferor has surrendered control over the securities transferred and the transferee has obtained control over those securities with the ability to sell or transfer them at will. In that circumstance, creditors of the transferor have a claim only to the collateral and the forward repurchase commitment. ##### [860-10-55-56](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ddc1e88625d97bb05204a031e6a41575c1d4287ac71f10945cddebe4152e1432 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Repurchase agreements that involve an exchange of securities or letters of credit are accounted for in the same manner as securities lending transactions (see paragraphs [860-30-25-7 through 25-8](https://asc.understandingaccounting.org/asc/860/30/#860-30-25-7) ). ##### [860-10-55-56A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-56A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:1992d55980f0de6ef1203c41ca684294583a421ef86f29046196a612c6f18a6b 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/). ##### [860-10-55-56B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-56B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:3280d7b2d595dc2ea6b1a88b5b27fdfbaac4b2543d5493bb005c3348a75db88b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In repurchase agreements and securities lending transactions in which the transferor does not derecognize the transferred financial asset, if the transferee obtains the right to sell or pledge the asset, the transferor reclassifies the asset in its statement of financial position separately from other assets not so encumbered in accordance with paragraph [860-30-45-1](https://asc.understandingaccounting.org/asc/860/30/#860-30-45-1). ##### [860-10-55-57](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:a6981a043851fa617dcf25fe47f5e62b92709585b695ab626d630bd411a6f982 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Wash sales shall be accounted for as sales under this Subtopic. Unless there is a concurrent contract to repurchase or redeem the transferred financial assets from the transferee, the transferor does not maintain effective control over the transferred financial assets. ##### [860-10-55-58](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:2c2e38d7cd1cd6ff1e28c061384f7987fc0a846beab53cb4e48785b1a32e1198 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) precludes sale accounting for a dollar-roll transaction depends on the facts and circumstances. Paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) states the conditions under which an agreement that both entitles and obligates the transferor to repurchase or redeem transferred financial assets from the transferee maintains the transferor's effective control over those assets as described in paragraph [860-10-40-5(c)(1)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). The condition in paragraph [860-10-40-24(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) requires that the financial assets to be repurchased or redeemed are the same or substantially the same as those transferred. Paragraph [860-10-40-24(a)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) describes six characteristics that must all exist for a transfer to meet the substantially-the-same requirement. Paragraph [860-10-40-24(a)(6)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24) requires (as one of those six characteristics) that the financial asset that was transferred and the financial asset that is to be repurchased or redeemed have the same aggregate unpaid principal amount or principal amounts within accepted good delivery standards for the type of security involved. ##### [860-10-55-59](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:1c662ac4f530d756cba45a9a4f174590f2cea03f4aeb82888bc67178b3a52350 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For transfers of existing securities under a dollar-roll repurchase agreement, the transferee must be committed to return substantially-the-same securities to the transferor, which would indicate that the transferor has maintained effective control. In a transfer of existing securities under a dollar-roll repurchase agreement, if the transferee is committed to return substantially-the-same securities to the transferor but that transferee's securities at the time of the transfer were to-be-announced securities, the transferor would not be precluded from accounting for the transfer as a secured borrowing. The transferor is only required to obtain a commitment from the transferee to return substantially-the-same securities and is not required to determine that the transferee holds the securities that it has committed to return. Therefore, the financial asset to be returned may be a to-be-announced asset at the time of the transfer because the transferor would have no way of knowing whether the transferee held the security to be returned. ##### [860-10-55-60](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:fda9dfa2bd76b354e9d74cf275cc9e4d2890914d4f91066fcd2bda0e9c0fd563 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As illustrated by the following, whether a GNMA roll is accounted for as a secured borrowing or a sale affects the evaluation of the forward contract embedded in the securities subject to the agreement: 1. a Types 1-3 of dollar rolls would qualify for secured borrowing treatment if the redemption of securities on substantially the same terms is assured (see paragraph [860-10-40-24](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-24)). In that circumstance, the forward contracts embedded in the Types 1-3 securities are outside the scope of Topic 815 because of the scope exception provided in paragraph [815-10-15-63](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-63) for derivative instruments that serve as impediments to sale accounting. 2. b Types 2 and 3 securities that involve repurchase of other than substantially-the-same securities are considered sales of securities and forward contracts. The forward contract would need to be evaluated under Subtopic 815-10 because it has terms that would generally meet the definition of a derivative instrument. If the dollar-roll repurchase agreement is accounted for as a sale under this Subtopic, Subtopic 815-10 provides guidance on the subsequent accounting for the forward contract. ##### [860-10-55-61](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:34102eda751d2c795c806b58cf88fb3c4b641f32f44fa8a264aafbe768d32158 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [860-10-05-23](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-23) provides background on loan participations. If a loan participation agreement transfers a participating interest in an entire financial asset (as described in paragraph [860-10-40-6A](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-6A)) and the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met, the transfers shall be accounted for by the transferor as a sale of a participating interest. However, if the loan participation agreement constrains the transferee from pledging or exchanging its participating interest and that constraint provides a more-than-trivial benefit to the transferor, the transferor has not relinquished control and shall account for the transfer as a secured borrowing. ##### [860-10-55-62](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:e30a3a922bdc0ede9a296bda642bd5ff1395456110bf6ee60f633575d7de79c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraphs 860-10-55-62 through 55-64 superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-62). ##### [860-10-55-65](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:18f2db0b161a1148d8238a6501ed91948cd1ede9a2251bbd07f97ebc6ed29fa4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [860-10-05-24 through 05-26](https://asc.understandingaccounting.org/asc/860/10/#860-10-05-24) provide background on banker's acceptances and risk participations in them. An accepting bank that obtains a risk participation shall not [derecognize](https://asc.understandingaccounting.org/glossary/d/#derecognize "Remove previously recognized assets or liabilities from the statement of financial position.") the liability for the banker's acceptance, because the accepting bank is still primarily liable to the holder of the banker's acceptance even though it benefits from a guarantee of reimbursement by a participating bank. The accepting bank shall not derecognize the receivable from the customer because it has not transferred the receivable. Rather, it controls the benefits inherent in that receivable and it is still entitled to receive payment from the customer. The accepting bank shall, however, record the guarantee purchased, and the participating bank shall record a liability for the guarantee issued. For an illustration of this guidance, see Example 1 (paragraph [860-10-55-80](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-80)). ##### [860-10-55-66](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:00fb6b13591e86d5f940fa05b2f637325e6afb2e0425282548d9eac9330beabc 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/). ##### [860-10-55-67](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:0b1038fde7dc27795ba641758e2e0d6f9e0219644b2a9fd2371488b5aa62e923 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transferor has the ability to dissolve a securitization entity (for example, through the beneficial interests that it holds) and reassume control of the financial assets at any time, the transferor is precluded from accounting for the transfer as a sale for the following reason: 1. a [Subparagraph superseded by Accounting Standards Update No. 2009-16](https://asc.understandingaccounting.org/updates/asu-2009-16/). 2. b The transferor's current ability to dissolve the securitization entity and reassume control of the transferred financial assets entitles it to unilaterally cause the return of the transferred financial assets, indicating that the transferor has maintained control over the transferred financial assets which precludes sale accounting under paragraph [860-10-40-5(c)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). ##### [860-10-55-68](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:9aaf916bec4b12b8f439fa913b39d0f374884c16b9cd25ac9c2b321e6a53a8f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In certain transactions, the transferor is entitled to repurchase a transferred amortizing, individual (specific) financial asset when its remaining principal balance reaches some specified amount, for example, 30 percent of the original balance. To exercise that call option, the transferor would pay the remaining principal balance. Paragraph [860-10-40-5(c)(2)](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) states that a transferor maintains effective control through a call option,other than through a cleanup call, that provides the transferor with both: 1. a The unilateral ability to cause the holder to return specific financial assets 2. b A more-than-trivial-benefit attributable to that ability. ##### [860-10-55-68A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-68A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:59d2eb4983a038de7e99ee400de4f53929c09e1ff0b8bd8578bb5fc006bc2cd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Such a call option on the remaining portion of an entire financial asset precludes sale accounting for the entire financial asset. Paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) applies to an entire financial asset, a group of entire financial assets, or a participating interest. Paragraph [860-10-40-4A](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4A) states that, to be eligible for sale accounting, an entire financial asset cannot be divided into components before a transfer unless all of the components meet the definition of a participating interest. That paragraph states also that an entity shall not account for a transfer of an entire financial asset or a participating interest in an entire financial asset partially as a sale and partially as a secured borrowing. ##### [860-10-55-69](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:fd1770573960c4dcd8a227ca60489b3adbcaa853220af76dc5ebba960fca0e6b 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/). ##### [860-10-55-70](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:7595966e59227611a0e121b486b461c71337cc5836f258e095d7164b35d3371c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a transferor holds a call option to repurchase at any time a few specified, individual loans from an entire group of loans transferred in a securitization transaction, then sale accounting is precluded only for the specified loans subject to the call option, not the whole group of loans. In contrast, if the transferor holds a call option to repurchase from the group any loans it chooses, up to some specified limit, then sale accounting is precluded for the transfer of the entire group while that option remains outstanding. See paragraphs [860-10-55-39 through 55-42](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-39) for related guidance. ##### [860-10-55-71](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:c738e8d5c62f0d35c297c647cf440de9bdd2050381ee3f056f078bf2309150e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financial institution involved in commercial lending makes a short-term loan (for example, 90 days) to a borrower under a long-term credit commitment (for example, 5 years). The financial institution transfers the short-term loan, without recourse, to a third-party purchaser for the remaining term of the loan. The risk of loss relating to the short-term loan is legally transferred to the purchaser, and the financial institution has no contractual obligation to repurchase the short-term loan. Under the long-term credit commitment, the financial institution may, at the maturity of the short-term loan, relend to the borrower. However, the financial institution may refuse to relend to the borrower based on a current credit evaluation or if any covenant under the long-term commitment is not satisfied. ##### [860-10-55-72](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:d6fa54cf40583651b42fd96fdb76d71d73046f8e6d30176fccf33c3b1b4d9a16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent that the transfer of the short-term loan made under a long-term credit commitment as described above is accounted for as the transfer of a receivable with a put option, it would be required to be accounted for as a sale if the conditions of paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met. The terms of the put option should be analyzed to determine whether it meets the definition of a derivative instrument under Subtopic 815-10. ##### [860-10-55-73](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:aee0ecf7d0196b9dd2581d48cf94dbf2c760622438c2c799061c1f87eb955362 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A financial institution (transferor) transfers to a third-party transferee the right to an amount of future recoveries from loans previously written off by the transferor as uncollectible. The transferee is entitled to recoveries equal to the purchase price plus a market rate of interest on the unrecovered purchase price. There is no recourse to the transferor. The transferee can initiate its own collection efforts if dissatisfied with the transferor's recovery efforts. The transaction is a secured borrowing (that is, a borrowing secured by the transferred rights). ##### [860-10-55-74](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:5204f431f68ac005e279a06d52b7ece24d3e51e1304cbb547f8e4f9002f77b51 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/). ##### [860-10-55-75](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:351937fb41228c65b3e8aced8fda3869c2482971aa1bfd54e57f2fdfca7656e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may transfer debt securities to an unconsolidated entity that has a predetermined life in exchange for cash and the right to receive proceeds from the eventual sale of the securities. For example, a third party holds a beneficial interest that is initially worth 25 percent of the fair value of the assets of the entity at the date of transfer. The entity is required to sell the transferred securities at a predetermined date and liquidate the entity at that time. Assume the facts in that example and the following additional facts: 1. a The beneficial interests are issued in the form of debt securities. 2. b Before the transfer, the debt securities were accounted for as available-for-sale securities in accordance with Topic 320. ##### [860-10-55-76](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:791932aad8e901ca2cdbe3bcfe41d77a4d8ede924e98bc78018a787ef8df7352 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In that example, whether the transferor may classify the debt securities as trading at the time of the transfer depends on whether the transfer is accounted for as a sale or as a secured borrowing: 1. a Sale. If a transfer of a group of entire financial assets satisfies the conditions to be accounted for as a sale, Subtopic 860-20 requires that any assets obtained or liabilities incurred in the transfer be recognized (see paragraph [860-20-25-1](https://asc.understandingaccounting.org/asc/860/20/#860-20-25-1)) and initially measured at fair value (see paragraph [860-20-30-1](https://asc.understandingaccounting.org/asc/860/20/#860-20-30-1)). If the transfer in the example is accounted for as a sale, the transferor would account for the debt securities received as new assets and would have the option to classify the debt securities received as trading securities. 2. b Secured borrowing. If the transfer is accounted for as a secured borrowing, paragraph [860-30-25-2](https://asc.understandingaccounting.org/asc/860/30/#860-30-25-2) requires the transferor to continue to report the transferred debt securities in its statement of financial position with no change in their measurement (that is, basis of accounting). Paragraph [320-10-35-12](https://asc.understandingaccounting.org/asc/320/10/#320-10-35-12), which explains that transfers into or from the trading category should be rare, would continue to apply. ##### [860-10-55-77](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-77) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ec8820e12a0bd3a856bfb4fd2b905125a727bdfdcb751a4c6c9dfb10ba6ee64b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transferred financial assets were not securities subject to the guidance in Topic 320 before the transfer that was accounted for as a sale but the beneficial interests were issued in the form of debt securities, then the transferor would have the opportunity to decide the appropriate classification of the beneficial interests received as proceeds from the sale. ##### [860-10-55-78](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-78) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:9a2d397b45913f857a51514339d134050e4985d4c99558174885db0d0492eee7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transfer from one subsidiary (the transferor) to another subsidiary (the transferee) of a common parent would be accounted for as a sale in each subsidiary's separate-entity financial statements if both of the following requirements are met: 1. a All of the conditions in paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) (including the condition on isolation of the transferred financial assets) are met. 2. b The transferee's assets and liabilities are not consolidated into the separate-entity financial statements of the transferor. Paragraph [860-10-40-4](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-4) states that, in a transfer between two subsidiaries of a common parent, the transferor-subsidiary shall not consider parent involvements with the transferred financial assets in applying paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5). ##### [860-10-55-79](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-79) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:b93b4c2f07661f9117f5f35819be8b3217d6a5b6eefcbf7e3200b3bfd2a41746 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transferee was an equity method investee of the transferor, only the investment and not the investee's assets and liabilities would be reported in the transferor subsidiary's separate-entity financial statements. Therefore, the transferee would not be a consolidated affiliate of the transferor, and such a transfer could isolate the transferred financial assets and be accounted for as a sale if all other conditions of paragraph [860-10-40-5](https://asc.understandingaccounting.org/asc/860/10/#860-10-40-5) are met. ##### [860-10-55-79A](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-79A) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:d39d2df9c6328e2e5fb559bf68b10933a10c40c08af4f35837083820f156055a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of the glossary term _continuing involvement_. All available evidence shall be considered, including, but not limited to, all of the following: 1. a Explicit written arrangements 2. b Communications between the transferor and the transferee or its beneficial interest holders 3. c Unwritten arrangements customary in similar transfers. ##### [860-10-55-79B](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-79B) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:01a0aa3acfc41e23903524859acf35e26201c19342696d4a67cbae5a010c8941 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of continuing involvement include, but are not limited to, all of the following: 1. a Servicing arrangements 2. b Recourse or guarantee arrangements 3. c Agreements to purchase or redeem transferred financial assets 4. cc Options written or held 5. d Derivative instruments that are entered into contemporaneously with, or in contemplation of, the transfer 6. e Arrangements to provide financial support 7. f Pledges of collateral 8. g The transferor's beneficial interests in the transferred financial assets. #### Illustrations ##### [860-10-55-80](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-80) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:ec7400e8457e639b5b3b8ca0ed6390a808a22116a7dcadf59e20b6e1ad01d54b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [860-10-55-65](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-65). This Example has the following assumption. ##### [860-10-55-81](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-81) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:24ebc4fc0ce950a6b5a62c60448b1f096042b219bee54623f438a2ead4c9d22e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An accepting bank assumes a liability to pay a customer's vendor and obtains a risk participation from another bank. The details of the banker's acceptance are as follows: 1. a Face value of the draft provided to the vendor: $1,000 2. b Term of the draft provided to the vendor: 90 days 3. c Commission with an annual rate of 10 percent: 25 4. d Fee paid for risk participation: 10. ##### [860-10-55-82](https://asc.understandingaccounting.org/asc/860/10/#860-10-55-82) Pending content: no Source downloaded (UTC): 2026-09-10T02:05:52.081Z to 2026-09-10T02:05:52.081Z Record version: sha256:4c16cab4a83a45c70337e32643b7f7ad4978019bea6a8533f8ae79826d5b6abe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accepting bank would make the following journal entries. - ![](https://asc.understandingaccounting.org/asc-img/GUID-6CA956C0-D33C-4127-82F2-22D70187CFF6-low.gif) Journal Entries for Accepting Bank At issuance of acceptance: Receivable from customer " $1,000 " Cash 25 Time draft payable to vendor " $1,000 " Deferred acceptance commission revenue 25 At purchase of risk participation from a participating bank: Guarantee purchased 10 Cash 10 Upon presentation of the accepted time draft: Time draft payable to vendor " 1,000 " Deferred acceptance commission revenue 25 Cash " 1,000 " Acceptance commission revenue 25 "Upon collection from the customer (or the participating bank, if the customer defaults):" Cash " 1,000 " Guarantee expense 10 Receivable from customer " 1,000 " Guarantee purchased 10 - ![](https://asc.understandingaccounting.org/asc-img/GUID-CEE22628-84CA-4D17-B90C-954D9AABB5C0-low.gif) Journal Entries for Participating Bank Upon issuing the risk participation: Cash $10 Guarantee liability $10 Upon payment by the customer to the accepting bank: Guarantee liability 10 Guarantee revenue 10 OR: In the event of total default by the customer: Guarantee loss 990 Guarantee liability 10 Cash (paid to accepting bank) " 1,000 "