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Transferor Corp |
Transferee Corp |
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At inception: |
At inception: |
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Dr. Cash |
$980
|
Dr. Reverse repo agreements |
$980
|
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Cr. Obligation under repo agreements |
$980
|
Cr. Cash |
$980
|
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To record the receipt of cash and obligation under repo agreement |
To record transfer of cash to Transferor Corp in exchange for security (noncash collateral) |
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Dr. Securities pledged to Transferee Corp |
$1,000
|
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Cr. Securities |
$1,000
|
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To reclassify pledged security that Transferee Corp has the right to sell or repledge |
Transferee Corp does not recognize the security (noncash collateral) on its balance sheet. An obligation to return the security is recorded only if Transferee Corp on-sells it.
|
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Dr. Money market instrument |
$980
|
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Cr. Cash |
$980
|
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To record investment of cash collateral |
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At conclusion: |
At conclusion: |
|||||||
Dr. Cash |
$985
|
Dr. Cash |
$984
|
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Cr. Interest income |
$5
|
Cr. Reverse repo agreements |
$980
|
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Cr. Money market instrument |
$980
|
Cr. Interest income |
$4
|
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To record results of short-term cash investment |
To record receipt of cash upon maturity of reverse repo agreement and related interest income |
|||||||
Dr. Obligation under repo agreements |
$980
|
|||||||
Dr. Interest expense |
$4
|
|||||||
Cr. Cash |
$984
|
|||||||
To record repayment of repo obligation and related interest (security’s repurchase price) |
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Dr. Securities |
$1,000
|
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Cr. Securities pledged to Transferee Corp |
$1,000
|
|||||||
To reclassify security no longer pledged |
Transferor Corp |
Transferee Corp |
||||||||
At inception: |
At inception: |
||||||||
Dr. Cash |
$980
|
Dr. Reverse repo agreements |
$980
|
||||||
Cr. Obligation under repo agreements |
$980
|
Cr. Cash |
$980
|
||||||
To record the receipt of cash and obligation under repo agreement |
To record transfer of cash to Transferor Corp in exchange for security (noncash collateral) |
||||||||
Dr. Securities pledged to Transferee Corp |
$1,000
|
||||||||
Cr. Securities |
$1,000
|
||||||||
To reclassify pledged security that Transferee Corp has the right to sell or repledge |
Transferee Corp does not recognize the security (noncash collateral) on its balance sheet. An obligation to return the security is only recorded when Transferee Corp sells the security. |
||||||||
Dr. Money market instrument |
$980
|
||||||||
Cr. Cash |
$980
|
||||||||
To record investment of cash collateral |
|||||||||
When collateral is pledged: |
When collateral is pledged: |
||||||||
Dr. Cash |
$980
|
||||||||
Transferor Corp does not record an entry when Transferee Corp repledges the collateral. |
Cr. Obligations under repo agreements |
$980
|
|||||||
To record the sale of the security (noncash collateral) |
|||||||||
Dr. Money market investment |
$980
|
||||||||
Cr. Cash |
$980
|
||||||||
To record investment of cash received from on-selling the security |
|||||||||
At conclusion: |
At conclusion: |
||||||||
Dr. Cash |
$985
|
Dr. Cash |
$982
|
||||||
Cr. Interest income |
$5
|
Cr. Interest Income |
$2
|
||||||
Cr. Money market instrument |
$980
|
Cr. Money market instrument |
$980
|
||||||
To record results of short-term cash investment |
To record results of short-term cash investment |
||||||||
Dr. Securities |
$1,000
|
Dr. Obligations under repo agreements |
$980
|
||||||
Cr. Securities pledged to Transferee Corp |
$1,000
|
Cr. Cash |
$980
|
||||||
To reclassify security no longer pledged |
To record return of on sold security and cash collateral [note: interest expense omitted for sake of simplicity] |
||||||||
Dr. Obligation under repo agreements |
$980
|
Dr. Cash |
$984
|
||||||
Dr. Interest expense |
$4
|
Cr. Reverse repo agreements |
$980
|
||||||
Cr. Cash |
$984
|
Cr. Interest income |
$4
|
||||||
To record repayment of repo principal and interest (security’s repurchase price) |
To record the receipt of cash upon maturity (unwind) of reverse repo agreement |
Transferor Corp |
Transferee Corp |
|||||
At inception: |
At inception: |
|||||
Dr. Cash |
$980
|
Dr. Reverse repo agreements |
$980
|
|||
Cr. Obligation under repo agreements |
$980
|
Cr. Cash |
$980
|
|||
To record the receipt of cash and obligation under the repo agreement |
To record transfer of cash to the repo counterparty in exchange for pledged security |
|||||
Transferor Corp does not reclassify the pledged security because Transferee Corp does not have the right to sell or repledge it. |
||||||
Dr. Money market instrument |
$980
|
|||||
Cr. Cash |
$980
|
|||||
To record investment of cash collateral |
||||||
At conclusion: |
At conclusion: |
|||||
Dr. Cash |
$985
|
|||||
Cr. Interest income |
$5
|
|||||
Cr. Money market instrument |
$980
|
|||||
To record results of short-term cash investment |
||||||
Dr. Obligation under repo agreements |
$980
|
Dr. Cash |
$984
|
|||
Cr. Interest expense |
$4
|
Cr. Reverse repo agreements |
$980
|
|||
Cr. Cash |
$984
|
Cr. Interest income |
$4
|
|||
To record the repayment of repo principal and interest |
To record the receipt of cash upon maturity (unwind) of reverse repo agreement |
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Select a section below and enter your search term, or to search all click Transfers and servicing of financial assets