Finally, the repurchase price in the contract with the last customer is less than the original selling price and the market price is higher than the original selling price, so that this type of transaction must be recognized as a preferential sale. In order to easily understand pension transactions, we will re-examine the following asU 2014-11 scheme also changes the accounting guidelines for pension financing transactions. Under these agreements, the first step is a typical repo in which securities are transferred for cash. Then, in the second stage, the purchaser returns the asset as collateral for cash payment to the assignor and agrees to repurchase the guarantee for a certain amount of cash at a given time. These agreements result in off-balance sheet financing. Under previous rules, the part of the agreement was considered a sale; It is now likely that such agreements will result in a secured loan that takes into account most repurchase transactions. IFRS 15 states that if the purchase price is higher than the original selling price, the customer is incentivized, but if the purchase price is lower than the original selling price, there is no incentive for the customer. Going back to the examples above, we find in the first contract that the purchase price is lower than the original selling price. In the first contract with Customer 1, a machine is sold for 3,500,000 with the right or obligation to repurchase the asset for 2,900,000, the maximum duration for the exercise of the buyback option is one year from January 2018. The second contract has the same characteristics as Contract 1, except that the repurchase price is 3,700,000. On the basis of IFRS 15, the repurchase transaction should be treated as a financing agreement that does not generate revenue.
Another member wanted the decision on the agenda to be reduced and there would also be a discussion of the complication of the problem, and that judgment would be necessary to determine accounting treatment. Please provide a guide for accounting processing with newspaper articles. A repurchase agreement usually involves the transfer of securities for cash. The amount of money transferred depends on the market value of the securities, net of a declared percentage intended to be used as a cushion. This cushion, called «haircut,» protects the purchaser if the securities need to be liquidated to be repaid. In addition, the ceding company agrees to buy back the securities at a higher price at a later date. The repurchase price is generally higher than the initial price paid by the purchaser, the difference being interest. Since the seller is contractually obliged to repurchase the securities at an agreed price, he retains much of the risk of ownership. The new direction was surprisingly supported by financial institutions. Chart 3 summarizes responses received from the FASB from two requests for advice. The first exposure project for the purpose of effective control of pension operations (November 2010) is expected to change the criteria for the introduction of effective control. It resulted in comments containing proposals that were then included in the final standard («FASB proposes new accounting guidelines for rest,» KPMG Defining Issues, January 2013, No.