securitization
Accounting for securitizations treated as a financing
(on-balance sheet) verses securitizations treated as a sale
(off-balance sheet)
The hypothetical example below is provided for informational purposes only to assist the reader in understanding the accounting treatment of securitizations structured as financings and sales and are not a projection of our future performance, financial position or cash flows. The hypotheticals are based upon (i) assumptions that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, (ii) assumptions with respect to future business decisions that are subject to change, and (iii) assumptions that, while not probable, were made for the purpose of simplifying the hypotheticals. The purpose of these hypotheticals is to provide a simplified illustration of the accounting treatment of securitizations structured as financings and as sales. They are not intended to represent historical or expected securitizations or the impact of such securitizations on our historical or future performance, financial position or cash flows, which will necessarily vary from those presented in the hypotheticals and such variations are likely to be material. No representation is being made that the results of the hypotheticals will be achieved.
The accounting treatment of intercompany sales and securitizations can be complex. In the following exercise, we hope to provide some clarity on the subject. At the conclusion of this exercise, a couple of very important points should be clear. Net cash flow and net income always equal. However, timing differences arise due to GAAP accounting standards. Also, income will be split between the TRS and REIT differently, depending on the structure of securitization (sale or financing) used for accounting purposes.
The following assumptions are used to drive this
(on-balance sheet) verses securitizations treated as a sale
(off-balance sheet)
The hypothetical example below is provided for informational purposes only to assist the reader in understanding the accounting treatment of securitizations structured as financings and sales and are not a projection of our future performance, financial position or cash flows. The hypotheticals are based upon (i) assumptions that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, (ii) assumptions with respect to future business decisions that are subject to change, and (iii) assumptions that, while not probable, were made for the purpose of simplifying the hypotheticals. The purpose of these hypotheticals is to provide a simplified illustration of the accounting treatment of securitizations structured as financings and as sales. They are not intended to represent historical or expected securitizations or the impact of such securitizations on our historical or future performance, financial position or cash flows, which will necessarily vary from those presented in the hypotheticals and such variations are likely to be material. No representation is being made that the results of the hypotheticals will be achieved.
The accounting treatment of intercompany sales and securitizations can be complex. In the following exercise, we hope to provide some clarity on the subject. At the conclusion of this exercise, a couple of very important points should be clear. Net cash flow and net income always equal. However, timing differences arise due to GAAP accounting standards. Also, income will be split between the TRS and REIT differently, depending on the structure of securitization (sale or financing) used for accounting purposes.
The following assumptions are used to drive this