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ASC 860 — Transfers and Servicing

Below is an overview of FASB Accounting Standards Codification Topic 860, Transfers and Servicing, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.


ASC 860 comprises five Subtopics (Overall, Sales of Financial Assets, Secured Borrowing and Collateral, Transfers to Qualifying Special Purpose Entities, and Servicing Assets and Liabilities). Below is an overview of each Subtopic.

860-10 Overall

ASC 860-10 notes the following:


This Subtopic, together with the other Subtopics within this Topic, provides accounting and reporting standards for transfers and servicing of financial assets. It also addresses transfers of servicing rights.

Accounting for transfers in which the transferor has no continuing involvement with the transferred financial assets or with the transferee has not been controversial. However, transfers of financial assets often occur in which the transferor has some continuing involvement either with the assets transferred or with the transferee. Examples of continuing involvement with the transferred financial assets include, but are not limited to, any of the following:

a. Servicing arrangements

aa. Recourse arrangements

aaa. Guarantee arrangements

b. [Subparagraph superseded]

c. Agreements to purchase or redeem transferred financial assets

d. Options written or held

dd. Derivative financial instruments that are entered into contemporaneously with, or in contemplation of, the transfer

ddd. Arrangements to provide financial support

e. Pledges of collateral

f. The transferor’s beneficial interests in the transferred financial assets.

Transfers of financial assets with continuing involvement raise issues about the circumstances under which the transfers should be considered as sales of all or part of the assets or as secured borrowings and about how transferors and transferees should account for sales and secured borrowings. This Topic establishes standards for resolving those issues.

Sales and other transfers may result in a disaggregation of financial assets and liabilities into components, which become separate assets and liabilities. This Subtopic provides guidance on accounting for such transfers and provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings.

Transfers of financial assets take many forms. This guidance provides an overview of the following types of transfers discussed in this Topic:

  1. Securitizations
  2. Factoring
  3. Transfers of receivables with recourse
  4. Securities lending transactions
  5. Repurchase agreements
  6. Loan participations
  7. Banker's acceptances.

860-20 Sales of Financial Assets

ASC 860-20 notes that it "provides guidance on the accounting for a transfer of financial assets that satisfies the conditions for sale accounting in paragraph 860-10-40-5 and the accounting if a transferor regains control of assets previously sold."

860-30 Secured Borrowing and Collateral

ASC 860-30 notes the following:


This Subtopic provides guidance on transactions that are accounted for as secured borrowings with a transfer of collateral.

A debtor (obligor) may grant a security interest in certain assets to a lender (the secured party) to serve as collateral for its obligation under a borrowing, with or without recourse to other assets of the obligor. An obligor under other kinds of current or potential obligations, for example, interest rate swaps, also may grant a security interest in certain assets to a secured party.

If collateral is transferred to the secured party, the custodial arrangement is commonly referred to as a pledge. Secured parties sometimes are permitted to sell or repledge (or otherwise transfer) collateral held under a pledge. The same relationships occur, under different names, in transfers documented as sales that are accounted for as secured borrowings.

860-40 Transfers to Qualifying Special Purpose Entities

ASC 860-40 was superseded by ASU 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets (originally issued as FASB Statement No. 166), which removed the concept of a qualifying special-purpose entity.

860-50 Servicing Assets and Liabilities

ASC 860-50 notes the following:


This Subtopic provides accounting guidance for servicing assets and servicing liabilities.

Servicing of mortgage loans, credit card receivables, or other financial assets commonly includes, but is not limited to, the following activities:

  1. Collecting principal, interest, and escrow payments from borrowers
  2. Paying taxes and insurance from escrowed funds
  3. Monitoring delinquencies
  4. Executing foreclosure if necessary
  5. Temporarily investing funds pending distribution
  6. Remitting fees to guarantors, trustees, and others providing services
  7. Accounting for and remitting principal and interest payments to the holders of beneficial interests or participating interests in the financial assets.

A servicer of financial assets commonly receives the following benefits of servicing:

  1. Revenues from contractually specified servicing fees
  2. A portion of the interest from the financial assets
  3. Late charges
  4. Other ancillary sources, including float.

A servicer is entitled to receive all of those benefits of servicing only if it performs the servicing and incurs the costs of servicing the financial assets.

The full text of ASC 860 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

Content from the FASB Accounting Standards Codification® included at is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

    No current proposed ASUs on Topic 860.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.