Financial Sector (Collection of Data) (reporting standard) determination No. 34 of 2008 - ARS 320.4 - Bill Acceptances and Endorsements
Example - Treatment of own holdings of oExample - Treatment of own holdings of own acceptances
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Example - Treatment of own holdings of own acceptances
Suppose that a company (called the drawer or borrower) draws a bill of exchange payable in 180 days. The ADI then accepts these bills, and therefore accepts liability to pay to the person presenting the bill (called the holder) the face value of the bill on maturity. The ADI, as acceptor of the bill, will on maturity of the bill require the drawer (borrower) to pay the face value of the bill to the ADI.
This bill acceptance is reported on ARF 320.4 by the ADI accepting the bill at market value, which at inception is equal to the face value of the bill minus the discount, whether or not the bill is held within the ADI’s portfolio.
If this bill is accepted and not held within the ADI's portfolio, then this acceptance is reported on ARF 320.0 as a liability item "Acceptances", which represents the liability arising from the acceptance of the bill of exchange. A corresponding contra asset is reported as "Acceptances of customers", which represents the drawers' commitment to repay the face value of the bill to the ADI at maturity.