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Section 3856 - Financial Instruments

Section 3856 applies to all financial instruments except for the following:

  • Interests in subsidiaries, entities subject to significant influence, and joint arrangements that are accounted for in accordance with Section 1591, Subsidiaries, Section 3051, Investments, Section 3056, Interests in Joint Arrangements; however, this Section does apply to a derivative that is based on such an interest.
  • Leases (see Section 3065, Leases), although Appendix B of this Section applies to transfers of lease receivables.
  • Employer's rights and obligations for employee future benefits and related plan assets (see Section 3462, Employee Future Benefits).
  • Insurance contracts, including the cash surrender value of a life insurance policy.
  • Investments held by an investment company that are accounted for at fair value in accordance with AcG-18, Investment Companies; however, the disclosure requirements in paragraphs 3856.37-.54 apply to an investment company.
  • Contracts and obligations for stock-based compensation to employees and stock-based payments to non-employees (see Section 3870, Stock-based Compensation and Other Stock-based Payments).
  • Guarantees, other than guarantees that replace financial liabilities as described in paragraph 3856.A58 (see also AcG-14, Disclosure of Guarantees).
  • Contracts based on revenues of a party to the contract.
  • Loan commitments (see Section 3280, Contractual Obligations, and Section 3290, Contingencies).
  • Contractual arrangements that prevent sale treatment (for example, an option to repurchase transferred receivables).
  • Contracts issued by an acquirer (but not the seller) for contingent consideration in a business combination until such time as the contingency is resolved (see Section 1582, Business Combinations, paragraphs .41-.42). This exception applies only to the acquirer (the entity that is accounting for the combination) and not to the seller.

Does not apply to contracts to buy or sell non-financial items except for:

  • Exchange-traded futures contracts; and
  • Contracts that are designated in a qualifying hedging relationship in accordance with paragraphs 3856.30 -.36.

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