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This proposed statement of position (SOP) provides guidance for financial reporting of foreclosed assets after foreclosure. Briefly, the proposed SOP recommends the following: 1. There is a presumption that foreclosed assets will be sold. 2. Foreclosed assets that will be sold should be carried at the lower of cost or fair value. 3. Periodic net cash payments related to foreclosed assets held for sale should be charged to income; periodic net cash receipts related to foreclosed assets held for sale should be credited to the assets' carrying amount; no depreciation or amortization expense should be recognized. 4. The carrying amount of foreclosed assets held for the production of income instead of sale should not exceed net realizable value; revenue and expense cash flows are recognized in income; depreciation or amortization expense is recognized.
Foreclosure -- United States -- Accounting
Accounting | Taxation
American Institute of Certified Public Accountants. Accounting Standards Division. Accounting Standards Executive Committee, "Proposed statement of position : Accounting for foreclosed assets;Accounting for foreclosed assets; Exposure draft (American Institute of Certified Public Accountants), 1990, Dec. 11" (1990). Statements of Position. 545.