Beneficial interests can take many different forms, ranging from debt securities to equity interests issued by a limited partnership, LLC, or other entity. Securitization transactions may result in beneficial interests such as mortgage-backed securities, asset-backed securities, credit-linked notes, collateralized debt obligations, and interest-only (IO) or principal-only (PO) strips.
ASC 325-40 provides guidance on the accounting for interest income and impairment models for certain beneficial interests. The guidance applies to beneficial interests classified as held-to-maturity, available-for-sale, or trading. ASC 325-40 includes in its scope entities that account for financial assets at fair value with changes in fair value recorded in earnings. Refer to LI 14 for further information on accounting for beneficial interests that are within the scope of ASC 325-40, including guidance on the accounting for interest income.
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