Summary of Statement No. 77
Summary of Statement No. 77
Reporting by Transferors for Transfers of Receivables with Recourse (Issued 12/83)
Summary
This Statement specifies that a transferor ordinarily should
report a sale of receivables with recourse transaction as a sale if
(a) the transferor surrenders its control of the future economic
benefits relating to the receivables, (b) the transferor can
reasonably estimate its obligation under the recourse provisions,
and (c) the transferee cannot return the receivables to the
transferor except pursuant to the recourse provisions. If those
conditions do not exist, the amount of proceeds from the transfer
should be reported as a liability.
This Statement is effective for transfers made after December 31, 1983, including those made pursuant to earlier agreements. It amends a minor provision of FASB Statement No. 13, Accounting for Leases.
This project was undertaken in response to an Issues
Paper prepared by the AICPA and in considering an AICPA Statement
of Position, both of which addressed transfers of receivables with
recourse. The conclusions of this Statement differ from those
reached by the AICPA. It is not expected to change predominant
practice generally except that gain or loss on a transfer will be
recognized when a transfer is made rather than over the period the
receivables remain outstanding.