Transfers and Servicing of Financial Assets and Derecognition

Question 1

a transfer of financial assets that does not meet criteria for a sale should be accounted for as a

Answer 1

secured borrowing with a pledge of collateral

FASB ASC 860-30-25-1

Question 2

What are the two methods to measure servicing assets (servicing revenue exceeds costs) and servicing liabilities (costs exceed revenue)?

Answer 2

Amortization Method - Amortize over the period estimating servicing income or loss

Fair Value Measurement - Measure at Fair Value and reported changes in earnings

Question 3

when a transfer of financial assets occurs and the transferor surrenders control over those financial assets, a sale is deemed to have occurred as long as the consideration received is not

Answer 3

a beneficial interest in the transferred assets controlled by the transferor

Question 4

If the secured party (transferee) has the right by contract or custom to sell or repledge the collateral, then the obligor (transferor) shall

Answer 4

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.

Question 5

when an entity undertakes an obligation to service financial assets (collecting principal, interest, etc.) it should

Answer 5

require recognition and measurement of servicing assets (total servicing revenue is expected to exceed total servicing costs) or servicing liabilities (total servicing costs are expected to exceed total servicing revenues)

Question 6

Servicing Assets are usually recognized at?

Answer 6

Fair Value