Repurchase Agreement Types Flashcards
1
Q
A forward contract
A
An entity has obligation to repurchase the asset
2
Q
A call option
A
An entity has right to repurchase the asset
3
Q
A put option
A
Entity must repurchase asset if requested to by the customer
4
Q
Repurchase price < selling price
A
Lease if customer has economic incentive to exercise option
5
Q
Repurchase price >= selling price
A
Financing arrangement
6
Q
Call option double entry?
A
debit cash
debit finance cost
credit revenue (when received)
Credit liability (interest + cash)
7
Q
Significant financing component?
A
Debit finance cost and receivables from discounted
Discounted total credit revenue
8
Q
When is revenue recognised in a financing arrangement?
A
In derecognition only. Financial liability recognised up until derecognition
