Wiley GAAP: Financial Statement Disclosure Manual. Joanne M. Flood

Long‐term portion of accrued warranty costs xxx Total noncurrent liabilities xxx Total liabilities $xxx Shareholders' equity Capital stock: $12.50 convertible preferred stock, $100 stated value, 200,000 shares authorized, 175,000 outstanding $xxx 12% cumulative preferred stock, $100 stated value, callable at $115, 100,000 shares authorized and outstanding xxx Common stock, $10 stated value, 500,000 shares authorized, 450,000 issued, 15,000 held in treasury xxx Common stock subscribed 10,000 shares xxx Less: Subscriptions receivable (xxx) $xxx Additional paid‐in capital: From 12% cumulative preferred xxx From common stock xxx From treasury stock transactions xxx From stock dividends xxx From expiration of share options xxx Warrants outstanding xxx xxx Retained earnings xxx Accumulated other comprehensive income (xxx) Less: Treasury stock at cost (xxx) Total shareholders' equity $xxx Total liabilities and shareholders' equity $xxx

Example 3.3: Disclosure by Type of Financial Instrument²

      ABC Company has entered into transactions subject to an enforceable master netting arrangement or other similar agreement with the counterparties XYZ and QRS. The reporting entity has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements in paragraph 210‐20‐50‐1.

      1 ABC has a derivative asset (fair value of $100 million) and a derivative liability (fair value of $80 million) with XYZ. Assume that the entity qualifies for and makes an accounting policy election to offset in accordance with Section 815‐10‐45. Cash collateral also has been received from XYZ for a portion of the net derivative asset ($10 million). The derivative liability and the cash collateral received are set off against the derivative asset in the statement of financial position, resulting in the presentation of a net derivative asset of $10 million.

      2 Counterparty QRS (assume that the following two transactions are not offset):ABC had entered into a sale and repurchase agreement with QRS that is accounted for as a collateralized borrowing. The carrying value of the financial asset (bonds) used as collateral and held by the reporting entity for the transaction is $79 million, and their fair value is $85 million. The carrying value of the collateralized borrowing (repo payable) is $80 million.ABC also has entered into a reverse sale and repurchase agreement with QRS that is accounted for as a collateralized lending. The fair value of the asset (bonds) received as collateral (and not recognized in the statement of financial position) is $105 million. The carrying value of the secured lending (reverse repo receivable) is $90 million.

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Offsetting of Financial Assets and Derivatives—As of December 31, 20X0 Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets	Gross Amounts Offset in the Statement of Financial Position	Net Amounts of Assets Presented in the Statement of Financial Position	Gross Amounts Not Offset in the Statement of Financial Position
				Financial Instruments	Cash Collateral Received	Net Amount
Derivatives	$100,000	$(90,000)	$10,000	$–	$–	$10,000
Reverse repurchase, securities borrowings, and similar arrangements	90,000		90,000	(90,000)
Other financial instruments	–	–	–