# ASC 860-30-40: Transfers and Servicing — Secured Borrowing and Collateral — 40 Derecognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/860/30/#40-derecognition)

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## ASC 860-30-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/860/30/#40-derecognition)

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##### [860-30-40-1](https://asc.understandingaccounting.org/asc/860/30/#860-30-40-1)

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In circumstances where an obligor ([transferor](https://asc.understandingaccounting.org/glossary/t/#transferor "An entity that transfers a financial asset, an interest in a financial asset, or a group of financial assets that it controls to another entity.")) [transfers](https://asc.understandingaccounting.org/glossary/t/#transfer "The conveyance of a noncash financial asset by and to someone other than the issuer of that financial asset. A transfer includes the following: Selling a receivable Putting a receivable into a securitization trust Posting a receivable as collateral. A transfer excludes the following: The origination of a receivable Settlement of a receivable The restructuring of a receivable into a security in a troubled debt restructuring.") noncash [collateral](https://asc.understandingaccounting.org/glossary/c/#collateral "Personal or real property in which a security interest has been given.") 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](https://asc.understandingaccounting.org/glossary/d/#derecognize "Remove previously recognized assets or liabilities from the statement of financial position.") 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](https://asc.understandingaccounting.org/asc/860/30/#860-30-40-2)

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Otherwise paragraph [860-30-25-5(c)](https://asc.understandingaccounting.org/asc/860/30/#860-30-25-5) addresses the secured party's accounting for the collateral.