offsetting

Presentation4

1. 210-20Offsetting210 Balance Sheet

   ASC 210-20 states the general principle that offsetting assets and liabilities on the balance sheet is improper unless a right of setoff exists, and sets the four conditions for a right of setoff (210-20-45-1): two parties owe each other determinable amounts, the reporting party has the right to set off, intends to set off, and the right is enforceable at law (including in bankruptcy). It also provides a narrow exception permitting (but not requiring) offsetting of payables and receivables under same-counterparty, same-settlement-date repurchase and reverse repurchase agreements accounted for as collateralized borrowings that meet all conditions in 210-20-45-11, and it imposes extensive netting disclosures for derivatives, repos/reverse repos, and securities borrowing/lending subject to enforceable master netting arrangements.

2. 210-940Financial Services—Brokers and Dealers210 Balance Sheet

   ASC 210-940 addresses how brokers and dealers offset and combine amounts presented in the balance sheet. It contains no independent offsetting rules; it simply directs preparers to the general offsetting guidance in Section 210-20-45 and adopts the scope of the Financial Services—Brokers and Dealers Overall Subtopic (940-10-15).

3. 210-942Financial Services—Depository and Lending210 Balance Sheet

   This Subtopic governs how depository and lending institutions offset and combine amounts on the balance sheet. Its core rules: unearned premiums and unpaid claims on credit life and credit accident and health insurance issued to finance customers are deducted from finance receivables in consolidation (or the net amount presented with adequate note disclosure), while unpaid claims on property and level term life insurance—and credit coverage on receivables owned by unrelated entities—must be presented as liabilities. Reciprocal balances with another financial institution are offset only if they will be offset in the process of collection or payment, and restrictions on cash balances must be disclosed.

4. 210-944Financial Services—Insurance210 Balance Sheet

   This Subtopic addresses balance sheet presentation for insurance entities, focusing on when reinsurance-related balances may be offset. The core rule is that amounts payable to a policyholder and amounts recoverable from a reinsurer cannot be offset because the right of setoff under 210-20-45-1(b) requires amounts owed to and receivable from the *same* party. By contrast, balances arising between the ceding and assuming entities under a reinsurance contract may qualify for offsetting if the Subtopic 210-20 conditions are met.