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Subject Topic: Servicing Asset & liability (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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ericlau1984
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Posted: 14 Aug 2010 at 03:21 | IP Logged  

Anybody can tell me what's the meaning of servicing asset and servicing liability? and related accounting treatment, thanks.
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hgoertz
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Posted: 18 Aug 2010 at 14:17 | IP Logged  

From:
ASC topic 860-50-05

  • Servicing Assets

    A contract to service financial assets under which the benefits of servicing are expected to more than adequately compensate the servicer for performing the servicing. A servicing contract is either:

    • a.  Undertaken in conjunction with selling or securitizing the financial assets being serviced

    • b.  Purchased or assumed separately.


  • Servicing Liabilities

    A contract to service financial assets under which the estimated future revenues from contractually specified servicing fees, late charges, and other ancillary revenues (benefits of servicing) are not expected to adequately compensate the servicer for performing the servicing.



General



Currently Viewing:
860 Transfers and Servicing
50 Servicing Assets and Liabilities
05 Overview and Background
General
05-1     This Subtopic provides accounting guidance for servicing assets and servicing liabilities.

Currently Viewing:
860 Transfers and Servicing
50 Servicing Assets and Liabilities
05 Overview and Background
General
05-2     Servicing is inherent in all financial assets; it becomes a distinct asset or liability for accounting purposes only in the circumstances described in paragraph 860-50-25-1.

Currently Viewing:
860 Transfers and Servicing
50 Servicing Assets and Liabilities
05 Overview and Background
General
05-3     Servicing of mortgage loans, credit card receivables, or other financial assets commonly includes, but is not limited to, the following activities:

  • a.  Collecting principal, interest, and escrow payments from borrowers

  • b.  Paying taxes and insurance from escrowed funds

  • c.  Monitoring delinquencies

  • d.  Executing foreclosure if necessary

  • e.  Temporarily investing funds pending distribution

  • f.  Remitting fees to guarantors, trustees, and others providing services

  • g.  Accounting for and remitting principal and interest payments to the holders of beneficial interests in the financial assets.

Pending Content:  
Transition Date: November 15, 2009 Transition Guidance:  860-10-65-3
Servicing of mortgage loans, credit card receivables, or other financial assets commonly includes, but is not limited to, the following activities:
  • a.  Collecting principal, interest, and escrow payments from borrowers

  • b.  Paying taxes and insurance from escrowed funds

  • c.  Monitoring delinquencies

  • d.  Executing foreclosure if necessary

  • e.  Temporarily investing funds pending distribution

  • f.  Remitting fees to guarantors, trustees, and others providing services

  • g.  Accounting for and remitting principal and interest payments to the holders of beneficial interests or participating interests in the financial assets.

Currently Viewing:
860 Transfers and Servicing
50 Servicing Assets and Liabilities
05 Overview and Background
General
05-4     A servicer of financial assets commonly receives the following benefits of servicing:

A servicer is entitled to receive all of those benefits of servicing only if it performs the servicing and incurs the costs of servicing the financial assets.

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