In the borrower`s accounts, the bonds are recognised as an asset and the cash received from the lender would be recognised as a liability as a “loan in a repo transaction”. The accounting treatment of these transactions is generally determined by the facts and circumstances of the transactions, as well as by the interpretation of an IG B6 company. One member asked why such transactions were common. The first member to discuss the fact that there are different economic and accounting reasons for entering into such a transaction, as well as the ability or inability of the enterprise to enter into different types of transactions. The owner of the assets sells the financial assets to investors, usually overnight, and buys them back the next day at the same price, plus interest on the proceeds of the sale Another member accepted the recommendation of the General Staff and added that the committee should not and could not analyze this problem. According to that member, all three transactions reflect a derivative. The Chair had recently pointed out that the issue raised was on a particular topic and that the Committee generally did not discuss specific scenarios. He therefore invited the Committee to focus on indicators to determine whether the transaction as a whole or each transaction is treated as a single transaction, rather than dealing with problems specific to each transaction. One member stated that IG B6 was an implementation guide and therefore not a principle to be followed. The difficulty is whether this was the only guide provided. In August 2013, the Committee received a request for clarification on whether three different transactions should be separated or aggregated and treated as a single derivative. The three operations are as follows: Recording of interest expenses DR Interest expenses / CR Financial liabilities An accounting entry appears as a secured loan and not as a “sale” operation. Investor (funder) The investor buys securities The loan must be considered a financial liability at amortized cost The bonds that are guaranteed remain on the balance sheet.
The General Staff summarized the feedback it had received from the public relations it had provided and presented it to the Committee. It concluded that the Committee could not address the specific issue, as it would require an assessment that would depend on the specific facts and circumstances related to that issue. In addition, the current standard provides sufficient guidance to enable the company to identify the analysis needed to determine accounting. . . .