ASC

ASC 860-30

Secured Borrowing and Collateral

860 Transfers and Servicing

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In brief

IntermediateFinancial instrumentsRecognitionDerecognitionDisclosure

ASC 860-30 governs transfers of financial assets that fail the sale conditions and therefore must be accounted for as secured borrowings, plus the accounting for collateral pledged in such transactions. The transferor keeps the transferred asset on its balance sheet with no change in measurement basis (860-30-25-2), reclassifying it separately (e.g., "securities pledged to creditors") if the secured party may sell or repledge it (860-30-45-1). Cash collateral — and securities collateral the holder may sell or repledge — is treated as proceeds of a borrowing rather than as collateral, and is recognized as an asset by the recipient with a corresponding obligation to return it (860-30-25-3, 25-8).

Key points (7)
  • A transfer is accounted for as a secured borrowing with pledge of collateral if it fails the sale conditions of 860-10-40-5, or if a transfer of a portion of an entire financial asset does not meet the participating interest definition; the transferor continues to report the asset with no change in its basis of accounting (860-30-25-2).
  • All cash collateral is recorded as an asset by the secured party receiving it with a liability to return it, and as a receivable by the obligor, because cash transfers cannot be distinguished from borrowing cash (860-30-25-3).
  • Cash, or securities the holder may sell or repledge, received as 'collateral' for noncash financial assets (e.g., securities lending) is not collateral accounting but proceeds of a sale or borrowing (860-30-25-4, 25-8, 25-9).
  • Noncash collateral accounting depends on the secured party's right to sell or repledge and on default: if that right exists the obligor reclassifies and separately reports the asset (860-30-25-5(a), 860-30-45-1); if the secured party sells the collateral it recognizes the proceeds and an obligation to return the collateral (860-30-25-5(b)); otherwise the obligor keeps the asset and the secured party recognizes nothing (860-30-25-5(d)).
  • On the obligor's default with no right of redemption, the obligor derecognizes the pledged asset and the secured party recognizes it, initially measured at fair value if not already sold; a secured party that already sold the collateral derecognizes its return obligation (860-30-25-5(c), 860-30-30-1, 860-30-40-1).
  • Reclassified pledged collateral continues to be measured under the same principles as before the transfer (e.g., AFS at fair value through OCI, HTM at amortized cost) (860-30-35-2), while the obligation to return collateral is measured under other guidance (banks selling collateral measure it like a short sale at fair value per 942-405-35-1).
  • Required disclosures include collateral policies, carrying amounts of pledged assets not reclassified and associated liabilities, fair value of accepted collateral permitted to be sold or repledged and the portion sold or repledged (860-30-50-1A), and for repos, securities lending, and repurchase-to-maturity transactions, disaggregation of the gross obligation by class of collateral, remaining contractual maturity, and risk discussion (860-30-50-7).

For students. This is the default landing spot whenever a transfer fails sale accounting under 860-10-40-5 — repos, dollar rolls, and securities lending — so know that the transferor keeps the asset at its old measurement basis and simply books a borrowing. The classic trap is applying "collateral" accounting to cash received in a securities lending deal: cash (and securities that can be sold or repledged) is proceeds of a borrowing, not collateral.

secured borrowingcollateral pledgedright to sell or repledgerepurchase agreementsecurities lending transactionfailed sale treatmentobligation to return collateralamount at risk

Machine-generated study aid for ASC 860-30. Check the source paragraphs below.

860-30-00Status

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860-30-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Beneficial InterestsAmendedAccounting Standards Update No. 2009-1612/23/2009
Financial Asset (2nd def.)AmendedAccounting Standards Update No. 2016-1912/14/2016
Not-for-Profit EntityAddedAccounting Standards Update No. 2023-0610/09/2023
Public Business EntityAddedAccounting Standards Update No. 2023-0610/09/2023
Repurchase AgreementAddedAccounting Standards Update No. 2014-1106/12/2014
Repurchase Agreement Accounted for as a Collateralized BorrowingAddedAccounting Standards Update No. 2014-1106/12/2014
Repurchase-to-Maturity TransactionAddedAccounting Standards Update No. 2014-1106/12/2014
Reverse Repurchase Agreement Accounted for as a Collateralized BorrowingAddedAccounting Standards Update No. 2014-1106/12/2014
SecurityAddedAccounting Standards Update No. 2023-0610/09/2023
TransfereeAmendedAccounting Standards Update No. 2009-1612/23/2009
TransferorAmendedAccounting Standards Update No. 2009-1612/23/2009
860-30-10-1SupersededAccounting Standards Update No. 2009-1612/23/2009
860-30-15-1AmendedAccounting Standards Update No. 2023-0610/09/2023
860-30-25-2AmendedAccounting Standards Update No. 2009-1612/23/2009
860-30-25-6AmendedAccounting Standards Update No. 2014-1106/12/2014
860-30-25-7AmendedAccounting Standards Update No. 2009-1612/23/2009
860-30-45-2AmendedAccounting Standards Update No. 2023-0610/09/2023
860-30-45-2AAddedAccounting Standards Update No. 2023-0610/09/2023
860-30-45-3AmendedAccounting Standards Update No. 2023-0610/09/2023
860-30-45-3AmendedMaintenance Update 2015-11 (PDF)06/19/2015
860-30-50-1SupersededAccounting Standards Update No. 2009-1612/23/2009
860-30-50-1AAmendedAccounting Standards Update No. 2025-1112/08/2025
860-30-50-1AAmendedAccounting Standards Update No. 2009-1612/23/2009
860-30-50-2 through 50-5SupersededAccounting Standards Update No. 2009-1612/23/2009
860-30-50-6SupersededAccounting Standards Update No. 2014-1106/12/2014
860-30-50-6AddedAccounting Standards Update No. 2013-0101/31/2013
860-30-50-7AmendedAccounting Standards Update No. 2023-0610/09/2023
860-30-50-7AddedAccounting Standards Update No. 2014-1106/12/2014
860-30-50-8AddedAccounting Standards Update No. 2014-1106/12/2014
860-30-50-9 through 50-12AddedAccounting Standards Update No. 2023-0610/09/2023
860-30-55-4AmendedAccounting Standards Update No. 2023-0610/09/2023
860-30-55-4AmendedMaintenance Update 2016-11 (PDF)06/27/2016
860-30-55-4AddedAccounting Standards Update No. 2014-1106/12/2014
860-30-60-1AmendedAccounting Standards Update No. 2014-1106/12/2014

860-30-05Overview and Background

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860-30-05-1
This Subtopic provides guidance on transactions that are accounted for as secured borrowings with a transfer of collateral.
860-30-05-2
A debtor (obligor) may grant a security interest in certain assets to a lender (the secured party) to serve as collateral for its obligation under a borrowing, with or without recourse to other assets of the obligor. An obligor under other kinds of current or potential obligations, for example, interest rate swaps, also may grant a security interest in certain assets to a secured party.
860-30-05-3
If collateral is transferred to the secured party, the custodial arrangement is commonly referred to as a pledge. Secured parties sometimes are permitted to sell or repledge (or otherwise transfer) collateral held under a pledge. The same relationships occur, under different names, in transfers documented as sales that are accounted for as secured borrowings (see paragraph 860-30-25-2).

860-30-10Objectives

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860-30-15Scope and Scope Exceptions

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Overall Guidance

860-30-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 860-10-15, with specific transaction qualifications noted below.
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7 This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 860-10-15, with specific transaction qualifications noted below. Paragraph 860-30-50-7(d) applies to public business entities only.

Transactions

860-30-15-2
The collateral accounting provisions of paragraphs 860-30-25-5, 860-30-30-1, and 860-30-45-1 apply to all transfers of financial assets pledged as collateral in a transaction accounted for as a secured borrowing.
860-30-15-3
The guidance in this Subtopic applies to many types of transactions in which cash is obtained in exchange for financial assets with an obligation for an opposite exchange later. For example, that guidance may apply to any of the following types of transactions with those characteristics:
  1. a
    Repurchase agreements
  2. b
    Dollar rolls
  3. c
    Securities lending transactions.

860-30-25Recognition

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860-30-25-1
This Section provides guidance on the recognition of transfers of financial assets as secured borrowings with a pledge of collateral. It addresses the following areas:
  1. a
    Cash collateral
  2. b
    Noncash collateral
  3. c
    Cash or securities received as proceeds
  4. d
    Sales of collateral received.
860-30-25-2
The transferor and transferee shall account for a transfer as a secured borrowing with pledge of collateral in either of the following circumstances:
  1. a
    If a transfer of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset does not meet the conditions for a sale in paragraph 860-10-40-5
  2. b
    If a transfer of a portion of an entire financial asset does not meet the definition of a participating interest.
The transferor shall continue to report the transferred financial asset in its statement of financial position with no change in the asset's measurement (that is, basis of accounting).

Cash Collateral

860-30-25-3
Transfers of financial assets in exchange for cash collateral cannot be distinguished from borrowing cash. Further, because cash is fungible, it is impossible to determine whether it has been used by the secured party. Accordingly, all cash collateral shall be recorded as an asset by the party receiving it (the secured party), together with a liability for the obligation to return it to the payer (obligor), whose asset is a receivable.
860-30-25-4
Cash collateral used, for example, in securities lending transactions (see paragraphs
860-10-05-16 through 05-18
) shall be derecognized by the obligor and recognized by the secured party, not as collateral but rather as proceeds of either a sale or a borrowing. See paragraphs
860-30-25-6 through 25-9
for further discussion of recognition of cash and noncash collateral as proceeds of a transfer.

Noncash Collateral

860-30-25-5
The accounting for noncash collateral by the obligor (or debtor) and the secured party depends on whether the secured party has the right to sell or repledge the collateral and on whether the obligor has defaulted. Noncash collateral shall be accounted for as follows:
  1. a
    If the secured party (transferee) has the right by contract or custom to sell or repledge the collateral, then paragraph 860-30-45-1 requires that the obligor (transferor) reclassify that asset and report that asset in its statement of financial position separately (for example, as security pledged to creditors) from other assets not so encumbered.
  2. b
    If the secured party (transferee) sells collateral pledged to it, it shall recognize the proceeds from the sale and its obligation to return the collateral. The sale of the collateral is a transfer subject to the provisions of this Topic.
  3. c
    If the obligor (transferor) defaults under the terms of the secured contract and is no longer entitled to redeem the pledged asset, it shall derecognize the pledged asset as required by paragraph 860-30-40-1 and the secured party (transferee) shall recognize the collateral as its asset. (See paragraph 860-30-30-1 for guidance on the secured party's initial measurement of collateral recognized. See paragraph 860-30-40-1 for further guidance if the debtor has sold the collateral.)
  4. d
    Except as provided in paragraph 860-30-40-1 the obligor (transferor) shall continue to carry the collateral as its asset, and the secured party (transferee) shall not recognize the pledged asset.

Cash or Securities Received as Proceeds

860-30-25-6
Paragraph 860-10-55-55A discusses securities lending transactions in which the criteria in paragraph 860-10-40-5 for a sale are met. The following guidance relates to securities lending or similar transactions in which a transferor (lender) transfers securities and receives either cash or securities as collateral and the transfer does not meet the sale criteria in that paragraph.
860-30-25-7
Many securities lending transactions are accompanied by an agreement that both entitles and obligates the transferor to repurchase or redeem the transferred financial assets before their maturity. Paragraph 860-10-40-24 states that 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), if all of the conditions in paragraph 860-10-40-24 are met. Those transactions shall be accounted for as secured borrowings, in which either cash or securities that the holder is permitted by contract or custom to sell or repledge received as collateral are considered the amount borrowed, the securities loaned are considered pledged as collateral against the cash borrowed and reclassified as set forth in paragraph 860-30-25-5(a), and any rebate paid to the transferee of securities is interest on the cash the transferor is considered to have borrowed.
860-30-25-8
In a securities lending transaction, the transferor of securities being loaned accounts for cash received in the same way whether the transfer is accounted for as a sale or a secured borrowing. Cash collateral or securities received as collateral that a securities lender is permitted to sell or repledge are the proceeds of a borrowing secured by them. The cash received shall be recognized as the transferor's asset, as shall investments made with that cash, even if made by agents or in pools with other securities lenders, along with the obligation to return the cash. If securities that may be sold or repledged are received, the transferor of the securities being loaned accounts for those securities in the same way as it would account for cash received. See Example 1 (paragraph 860-30-55-1) for an illustration of a securities lending transaction that is accounted for as a secured borrowing in which cash collateral is transferred.
860-30-25-9
As noted in paragraphs 860-30-25-4 and 860-30-25-8, the collateral accounting provisions do not apply to cash, or securities that can be sold or pledged for cash, received as so-called collateral for noncash financial assets, for example, in certain securities lending transactions. Such cash or securities that can be sold or pledged for cash are accounted for as proceeds of either a sale or a borrowing.

Sales of Collateral Held

860-30-25-10
Obligations to return to the transferor assets borrowed and then sold have sometimes been effectively recognized as part of a liability for securities sold but not yet purchased, and this Section does not require any change in that practice.

860-30-30Initial Measurement

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Noncash Collateral

860-30-30-1
Noncash collateral recognized by the secured party as its asset under paragraph 860-30-25-5(c) that the secured party has not already sold shall be initially measured at fair value.

860-30-35Subsequent Measurement

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860-30-35-1
This Section provides subsequent measurement guidance for the following assets and liabilities related to transfers that are accounted for as secured borrowings:
  1. a
    Pledged assets required to be reclassified
  2. b
    Obligation to return transferred collateral.

Pledged Assets Required to Be Reclassified

860-30-35-2
A transferor that has transferred collateral that must be reclassified in accordance with paragraph 860-30-25-5(a) (for example, as securities pledged to creditors) shall not change its measurement of that collateral. The transferor shall follow the same measurement principles as before the transfer. For example, securities reclassified from the available-for-sale category to securities pledged to creditors should continue to be measured at fair value, with changes in fair value reported in comprehensive income, while debt securities reclassified from the held-to-maturity category to securities pledged to creditors should continue to be measured at amortized cost. See Topic 320 for guidance related to measurement of investments in securities classified as available for sale and held to maturity.

Obligation to Return Transferred Collateral

860-30-35-3
This Section does not provide specific guidance on the subsequent measurement of the obligation to return transferred collateral. The liability to return the collateral shall be measured in accordance with other relevant accounting guidance. Paragraph 942-405-35-1 requires that a bank or savings institution that, as transferee, sells transferred collateral subsequently measure that liability like a short sale at fair value.

860-30-40Derecognition

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860-30-40-1
In circumstances where an obligor (transferor) transfers noncash collateral in a secured borrowing and the obligor (transferor) defaults under the terms of the secured contract and is no longer entitled to redeem the pledged asset, the obligor shall derecognize the pledged asset. If the secured party has already sold the collateral, the secured party shall derecognize its obligation to return the collateral.
860-30-40-2
Otherwise paragraph 860-30-25-5(c) addresses the secured party's accounting for the collateral.

860-30-45Other Presentation Matters

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860-30-45-1
If the secured party (transferee) has the right by contract or custom to sell or repledge the collateral, then the obligor (transferor) shall reclassify that asset and report that asset in its statement of financial position separately (for example, as security pledged to creditors) from other assets not so encumbered.
860-30-45-2
Liabilities incurred by either the secured party or obligor in securities borrowing or resale transactions shall be separately classified.
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7 Liabilities , including accrued interest, incurred by either the secured party or obligor in securities borrowing or resale transactions shall be separately classified.
860-30-45-2A
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7 If as of the date of the most recent statement of financial position the aggregate carrying amount of reverse repurchase agreements (securities or other assets purchased under agreements to resell) exceeds 10 percent of total assets, the assets shall be separately classified.
860-30-45-3
This Section does not specify the classification or the terminology to be used to describe the following:
  1. a
    Pledged assets reclassified by the transferor of securities loaned or transferred under a repurchase agreement accounted for as a collateralized borrowing if the transferee is permitted to sell or repledge those securities
  2. b
    Liabilities incurred by either the secured party or obligor in securities borrowing or resale transactions.
Example 1 (see paragraph 860-30-55-1) illustrates possible classifications and terminology.
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7 This Section does not specify the classification or the terminology to be used to describe the following:
  1. a
    Pledged assets reclassified by the transferor of securities loaned or transferred under a repurchase agreement accounted for as a collateralized borrowing if the transferee is permitted to sell or repledge those securities
  2. b
    Liabilities, including accrued interest, incurred by either the secured party or obligor in securities borrowing or resale transactions.
Example 1 (see paragraph 860-30-55-1) illustrates possible classifications and terminology.

860-30-50Disclosure

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860-30-50-1A
An entity shall disclose all of the following for collateral:
  1. a
    If the entity has entered into repurchase agreements or securities lending transactions, it shall disclose its policy for requiring collateral or other security.
  2. b
    As of the date of the latest statement of financial position presented, both of the following:
    1. 1
      The carrying amount and classifications of both of the following:
      1. i
        Any assets pledged as collateral that are not reclassified and separately reported in the statement of financial position in accordance with paragraph 860-30-25-5(a)
      2. ii
        Associated liabilities.
    2. 2
      Qualitative information about the relationship(s) between those assets and associated liabilities; for example, if assets are restricted solely to satisfy a specific obligation, a description of the nature of restrictions placed on those assets.
  3. c
    If the entity has accepted collateral that it is permitted by contract or custom to sell or repledge, it shall disclose all of the following:
    1. 1
      The fair value as of the date of each statement of financial position presented of that collateral
    2. 2
      The fair value as of the date of each statement of financial position presented of the portion of that collateral that it has sold or repledged
    3. 3
      Information about the sources and uses of that collateral.
For overall guidance on Topic 860's disclosures, see Section 860-10-50.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1For interim and annual reporting periods, an entity shall disclose all of the following for collateral:
  1. a
    If the entity has entered into repurchase agreements or securities lending transactions, it shall disclose its policy for requiring collateral or other security.
  2. b
    As of the date of the latest statement of financial position presented, both of the following:
    1. 1
      The carrying amount and classifications of both of the following:
      1. i
        Any assets pledged as collateral that are not reclassified and separately reported in the statement of financial position in accordance with paragraph 860-30-25-5(a)
      2. ii
        Associated liabilities.
    2. 2
      Qualitative information about the relationship(s) between those assets and associated liabilities; for example, if assets are restricted solely to satisfy a specific obligation, a description of the nature of restrictions placed on those assets.
  3. c
    If the entity has accepted collateral that it is permitted by contract or custom to sell or repledge, it shall disclose all of the following:
    1. 1
      The fair value as of the date of each statement of financial position presented of that collateral
    2. 2
      The fair value as of the date of each statement of financial position presented of the portion of that collateral that it has sold or repledged
    3. 3
      Information about the sources and uses of that collateral.
For overall guidance on Topic 860's disclosures, see Section 860-10-50.

Disclosures for Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions

860-30-50-7
To provide an understanding of the nature and risks of short-term collateralized financing obtained through repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions, that are accounted for as secured borrowings at the reporting date, an entity shall disclose the following information for each interim and annual period about the collateral pledged and the associated risks to which the transferor continues to be exposed after the transfer:
  1. a
    A disaggregation of the gross obligation by the class of collateral pledged. An entity shall determine the appropriate level of disaggregation and classes to be presented on the basis of the nature, characteristics, and risks of the collateral pledged.
    1. 1
      Total borrowings under those agreements shall be reconciled to the amount of the gross liability for repurchase agreements and securities lending transactions disclosed in accordance with paragraph 210-20-50-3(a) before any adjustments for offsetting. Any difference between the amount of the gross obligation disclosed under this paragraph and the amount disclosed in accordance with paragraph 210-20-50-3(a) shall be presented as reconciling item(s).
  2. b
    The remaining contractual maturity of the repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions. An entity shall use judgment to determine an appropriate range of maturity intervals that would convey an understanding of the overall maturity profile of the entity's financing agreements.
  3. c
    A discussion of the potential risks associated with the agreements and related collateral pledged, including obligations arising from a decline in the fair value of the collateral pledged and how those risks are managed.
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7To provide an understanding of the nature and risks of short-term collateralized financing obtained through repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions, that are accounted for as secured borrowings at the reporting date, an entity shall disclose the following information for each interim and annual period about the collateral pledged and the associated risks to which the transferor continues to be exposed after the transfer:
  1. a
    A disaggregation of the gross obligation by the class of collateral pledged. An entity shall determine the appropriate level of disaggregation and classes to be presented on the basis of the nature, characteristics, and risks of the collateral pledged.
    1. 1
      Total borrowings under those agreements shall be reconciled to the amount of the gross liability for repurchase agreements and securities lending transactions disclosed in accordance with paragraph 210-20-50-3(a) before any adjustments for offsetting. Any difference between the amount of the gross obligation disclosed under this paragraph and the amount disclosed in accordance with paragraph 210-20-50-3(a) shall be presented as reconciling item(s).
  2. b
    The remaining contractual maturity of the repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions. An entity shall use judgment to determine an appropriate range of maturity intervals that would convey an understanding of the overall maturity profile of the entity's financing agreements.
  3. c
    A discussion of the potential risks associated with the agreements and related collateral pledged, including obligations arising from a decline in the fair value of the collateral pledged and how those risks are managed.
  4. d
    For a public business entity, the weighted-average interest rate of the repurchase liability and the related repurchase liability.
860-30-50-8
A reporting entity also shall disclose the information required by paragraphs
210-20-50-1 through 50-6
for both of the following that are either offset in accordance with Section 210-20-45 or subject to an enforceable master netting arrangement or similar agreement:
  1. a
    Recognized repurchase agreements accounted for as a collateralized borrowing and reverse repurchase agreements accounted for as a collateralized borrowing
  2. b
    Recognized securities borrowing and securities lending transactions.

Disclosures for Counterparty Risk for Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions

860-30-50-9
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7If as of the date of the most recent statement of financial position the amount at risk under repurchase agreements or the amount at risk under reverse repurchase agreements with any individual counterparty or group of related counterparties exceeds 10 percent of stockholders’ equity, an entity shall disclose the name(s) of those counterparties or group of related counterparties, the amount at risk with each, and the weighted-average maturity of the repurchase agreements or reverse repurchase agreements with each.
860-30-50-10
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7As used in this Subtopic, the amount at risk under repurchase agreements is the excess of the carrying amount (or market value, if higher than the carrying amount or if there is no carrying amount) of the securities or other assets sold under agreement to repurchase, including accrued interest plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability (adjusted for accrued interest).
860-30-50-11
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7As used in this Subtopic, the amount at risk under reverse repurchase agreements is the excess of the carrying amount of the reverse repurchase agreements over the market value of assets delivered in accordance with the agreements by the counterparty to an entity (or to a third-party agent that has affirmatively agreed to act on behalf of the entity) and not returned to the counterparty, except in exchange for their approximate market value in a separate transaction.
860-30-50-12
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7If the aggregate carrying amount of reverse repurchase agreements exceeds 10 percent of total assets as described in paragraph 860-30-45-2A, an entity shall disclose whether there are any provisions to ensure that the market value of the underlying assets remains sufficient to protect the entity in the event that the counterparty defaults and, if so, the nature of those provisions.

860-30-55Implementation Guidance and Illustrations

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Illustrations

860-30-55-1
This Example illustrates the guidance in paragraph 860-30-25-8 related to accounting for a securities lending transaction treated as a secured borrowing, in which the securities borrower sells the securities upon receipt and later buys similar securities to return to the securities lender. This Example has the following assumptions:
  1. a
    Transferor's carrying amount and fair value of security loaned: $1,000
  2. b
    Cash collateral: $1,020
  3. c
    Transferor's return from investing cash collateral at a 5 percent annual rate: $5
  4. d
    Transferor's rebate to the securities borrower at a 4 percent annual rate: $4.
860-30-55-2
For simplicity, the fair value of the security is assumed not to change during the 35-day term of the transaction.
860-30-55-3
The journal entries for the transferor and the transferee are as follows.
  • Journal Entries for the Transferor At inception: Cash " $1,020 " Payable under securities loan agreements " $1,020 " To record the receipt of cash collateral Securities pledged to creditors " 1,000 " Securities " 1,000 " To reclassify loaned securities that the secured party has the right to sell or repledge Money market instrument " 1,020 " Cash " 1,020 " To record investment of cash collateral At conclusion: Cash " 1,025 " Interest 5 Money market instrument " 1,020 " To record results of investment Securities " 1,000 " Securities pledged to creditors " 1,000 " To record return of security Payable under securities loan agreements " 1,020 " Interest (rebate) 4 Cash " 1,024 " To record repayment of cash collateral plus interest
  • Journal Entries for the Transferee At inception: Receivable under securities loan agreements " $1,020 " Cash " $1,020 " To record transfer of cash collateral Cash " 1,000 " Obligation to return borrowed securities " 1,000 " To record sale of borrowed securities to a third party and the resulting obligation to return securities that it no longer holds At conclusion: Obligation to return borrowed securities " 1,000 " Cash " 1,000 " To record the repurchase of securities borrowed Cash " 1,024 " Receivable under securities loan agreements " 1,020 " Interest revenue (rebate) 4 To record the receipt of cash collateral and rebate interest
860-30-55-4
This Example illustrates one approach for satisfying the quantitative disclosure requirements in paragraph 860-30-50-7.
  • "Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings (Dollars in millions)" 20XX Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ XXX $ XXX $ XXX $ XXX $ XXX State and municipal securities XXX XXX XXX XXX XXX Asset-backed securities XXX XXX XXX XXX XXX Corporate securities XXX XXX XXX XXX XXX Equity securities XXX XXX XXX XXX XXX Non-U.S. sovereign debt XXX XXX XXX XXX XXX Loans XXX XXX XXX XXX XXX Other XXX XXX XXX XXX XXX Total XXX XXX XXX XXX XXX 20XX Gross Obligations Overnight Up to 30 Days 30-90 Days Over 90 Days Securities lending transactions U.S. Treasury and agency securities XXX XXX XXX XXX XXX State and municipal securities XXX XXX XXX XXX XXX Corporate securities XXX XXX XXX XXX XXX Equity securities XXX XXX XXX XXX XXX Non-U.S. sovereign debt XXX XXX XXX XXX XXX Loans XXX XXX XXX XXX XXX Other XXX XXX XXX XXX XXX Total XXX XXX XXX XXX XXX Total borrowings $ XXX $ XXX $ XXX $ XXX $ XXX Gross amount of recognized liabilities for repurchase agreements and securities lending in footnote X $ XXX Amounts related to agreements not included in offsetting disclosure in footnote X $ XXX
Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance:
105-10-65-7 This Example illustrates one approach for satisfying the quantitative disclosure requirements in paragraph 860-30-50-7(a) through (b).
  • "Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings (Dollars in millions)" 20XX Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ XXX $ XXX $ XXX $ XXX $ XXX State and municipal securities XXX XXX XXX XXX XXX Asset-backed securities XXX XXX XXX XXX XXX Corporate securities XXX XXX XXX XXX XXX Equity securities XXX XXX XXX XXX XXX Non-U.S. sovereign debt XXX XXX XXX XXX XXX Loans XXX XXX XXX XXX XXX Other XXX XXX XXX XXX XXX Total XXX XXX XXX XXX XXX 20XX Gross Obligations Overnight Up to 30 Days 30-90 Days Over 90 Days Securities lending transactions U.S. Treasury and agency securities XXX XXX XXX XXX XXX State and municipal securities XXX XXX XXX XXX XXX Corporate securities XXX XXX XXX XXX XXX Equity securities XXX XXX XXX XXX XXX Non-U.S. sovereign debt XXX XXX XXX XXX XXX Loans XXX XXX XXX XXX XXX Other XXX XXX XXX XXX XXX Total XXX XXX XXX XXX XXX Total borrowings $ XXX $ XXX $ XXX $ XXX $ XXX Gross amount of recognized liabilities for repurchase agreements and securities lending in footnote X $ XXX Amounts related to agreements not included in offsetting disclosure in footnote X $ XXX

860-30-60Relationships

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Balance Sheet

860-30-60-1
For the conditions that must be met for an entity to be permitted to offset amounts recognized as payables under repurchase agreements accounted for as collateralized borrowings and amounts recognized as receivables under reverse repurchase agreements accounted for as collateralized borrowings, see paragraphs
210-20-45-11 through 45-12
.

860-30-S50DisclosureSEC

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Assets Subject to Lien

860-30-S50-1
See paragraph 235-10-S99-1, Regulation S-X Rule 4-08(b), for required disclosures for assets subject to lien.

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