In this paper, we discuss the accounting of retirement transactions, referring to the way pension transactions are marked by U.S. bankruptcy legislation, and in light of recent developments in the U.S. pension market. We conclude that the current accounting rules, which require the registration of most of these transactions as secured loans, can lead to opacity in a company`s financial statements, as they misreprescise the economic substance of pension transactions. Accounting for pension transactions as sales and simultaneous recording of a date, since Lehman Brothers accounts for „Repo 105“ transactions, also overlooked the merits. In particular, such a method provides a more complete and transparent picture of the economic substance of these transactions. 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. A company enters into a contract to sell a facility to a debiteur for $1,200. The contract offers the entity the opportunity to repurchase the asset at a price of $1300 within three years. The transaction is not part of a lease-sale agreement.
The company uses a discount rate of 5 per cent for similar transactions. Should this transaction be counted as a lease or financing agreement? AsU 2014-11 also amends 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. The new accounting rules will make it more difficult for companies to repeat the aggressive accounting of Lehman`s deposits. The increased transparency afforded by the new rules should allow investors and analysts to better understand the companies that use reaner transactions. This does not eliminate the risk of repurchase transactions, but underscores the need for ongoing monitoring and monitoring to prevent future abuses.
And in the third contract, we have that the repurchase price is 2,900,000 and a fair value of 4,000,000, unlike previous contracts where the company had the possibility or obligation to buy back the asset, in this third contract, the entity is obliged to repurchase the assets at the request of the customer. In June 2014, the FASB released the 2014-11 Accounting Standards Update (ASU), Transfers and Servicing (theme 860): pension transactions to maturity, pension financing and disclosures. The revised rules require companies to deduct securities repurchase transactions (TMRs) as guaranteed obligations. An RTM is a pension contract by which the securities are due on the same day the pension contract ends. Prior to the update, the FASB made a distinction between a TMR and a pension contract in which the securities had not yet expired upon their return to the original portion. Under the previous rules for the TMR agreements, the cedant was not considered to have effective control over the transferred assets, as he would not recover the assets until they expired. Under these conditions, the RTM agreements were considered outright sales (KPMG Defining Issues, „FASB proposes New Accounting Guidance for Repos,“ January 2013, No. 13-6). The obligation to repurchase the securities was not accounted for, so the underlying risk was not on the balance sheet. Under the new rules, the FASB has decided that, although the securities are not returned to the original party due to the maturity of the security, obtaining liquidity at the time of liquidation is essentially id.
