Chapter 11 - Solution Manual

As collateral or by third parties would be expected

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as collateral or by third parties would be expected to cover the maximum potential amount of future payments under the guarantee. [FIN 45, paragraph 13, sequence 84.2.2] ] [See the Product Warranties Subsection of Section 460–10–50 for an exception to the requirements of (b). [FIN 45, paragraph 13, sequence 82.2.2.2.2] ] > Effect of the Guarantee Disclosure Requirements on the Disclosure Requirements of Other Topics 460-10-50-5 [The disclosures required by this Subsection do not eliminate or affect the following disclosure requirements: [FIN 45, paragraph 15, sequence 88.1] ] a. [The requirements in the General Subsection of Section 825–10–50 that certain entities disclose the fair value of their financial guarantees issued [FIN 45, paragraph 15, sequence 88.2] ] b. [The requirements in paragraphs 450-20-50-3 through 50-4 that an entity disclose a contingent loss that has a reasonable possibility of occurring [FIN 45, paragraph 2, sequence 35.2.2.2] ] c. [The requirements in the Disclosure Sections of Topic 815, which apply to guarantees that are accounted for as derivatives [FIN 45, paragraph A20, sequence 161.2.1] ] d. The requirements in Section 275-10-50 that an entity disclose information about risks and uncertainties that could significantly affect the amounts reported in the financial statements in the near term. See Example 1 (paragraph 460-10-55-25) for an illustration of the required disclosure. 460-10-50-6 [Some guarantees are issued to benefit entities that are related parties such as joint ventures, equity method investees, and certain entities for which the controlling financial interest cannot be assessed by analyzing voting interests. In those cases, the disclosures required by this Topic are incremental to the disclosures required by Topic 850. [FIN 45, paragraph 16, sequence 89] ] FASB ASC 11-3 Derivatives Implementation issues for SFAS N. 133 are found at FASB ASC 815-10-55 and can be accessed through the cross reference feature. Use the Print with Sources function. The students’ answers should be based on the following: > Implementation Guidance 55-1This Section provides guidance on the following implementation matters: a. Determining whether a contract is within the scope of this Subtopic b. Unit of accounting—a transferable option is considered freestanding, not embedded c. Definition of derivative instrument d. Instruments not within scope e. Scope application to certain contracts f. Other presentation matters g. Synthetic guaranteed investment contracts
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233 h. Certain contracts on a consolidated subsidiary’s equity. Transition Date: December 15, 2008 Transition Guidance: 815-10-65-4 This Section provides guidance on the following implementation matters: a. Determining whether a contract is within the scope of this Subtopic b. Unit of accounting—a transferable option is considered freestanding, not embedded c. Definition of derivative instrument d. Instruments not within scope e. Scope application to certain contracts f. Other presentation matters g. Synthetic guaranteed investment contracts.
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