Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Netting off assets and liabilities
AU - Peasnell, Ken
AU - Buchan, Margaret
AU - Yaansah, Robert
PY - 1992/12/31
Y1 - 1992/12/31
N2 - Off-balance sheet financing schemes take a variety of forms. An important class involves offsetting liabilities and assets, a practice traditionally frowned upon by accountants, and for good reason. This paper argues that attempts to limit offsetting can, if taken too far, result in the elimination of reporting alternatives which are useful when viewed from efficient contracting and information perspectives. Particular reference is made to the issues raised by mortgage securitisation in general, and the peculiar accounting method employed by one particular participant in the market (HMC Group PLC), to show the group accounting dimension of the problem. The position adopted here is that the recognition issue essentially boils down to whether the enterprise is judged to have an economic interest in the net or gross cash flow prospects afforded by the asset and liability in question.
AB - Off-balance sheet financing schemes take a variety of forms. An important class involves offsetting liabilities and assets, a practice traditionally frowned upon by accountants, and for good reason. This paper argues that attempts to limit offsetting can, if taken too far, result in the elimination of reporting alternatives which are useful when viewed from efficient contracting and information perspectives. Particular reference is made to the issues raised by mortgage securitisation in general, and the peculiar accounting method employed by one particular participant in the market (HMC Group PLC), to show the group accounting dimension of the problem. The position adopted here is that the recognition issue essentially boils down to whether the enterprise is judged to have an economic interest in the net or gross cash flow prospects afforded by the asset and liability in question.
KW - off-balance sheet finance
KW - accounting theory
U2 - 10.1080/00014788.1992.9729438
DO - 10.1080/00014788.1992.9729438
M3 - Journal article
VL - 22
SP - 207
EP - 217
JO - Accounting and Business Research
JF - Accounting and Business Research
SN - 0001-4788
IS - 87
ER -