Chapter 9: Off-Balance-Sheet Items and Special Purpose Entities

In this section

• Understanding Off-Balance-Sheet Arrangements
  Understanding Off-Balance-Sheet Arrangements (CFA Level 1): Defining Off-Balance-Sheet Arrangements, Common OBS Arrangements, and Operating Leases (Legacy Approach). Key definitions, formulas, and exam tips.
• Special Purpose Entities and Variable Interest Entities
  Special Purpose Entities and Variable Interest Entities (CFA Level 1): Key Concepts and Definitions, Special Purpose Entities (SPEs) and SPVs, and Variable Interest Entities (VIEs) Under US GAAP. Key definitions, formulas, and exam tips.
• Impact on Leverage and Coverage Ratios
  Impact on Leverage and Coverage Ratios (CFA Level 1): Why It Matters for Leverage Metrics and “Look-Through” Approach. Key definitions, formulas, and exam tips.
• Disclosure Requirements and Red Flags
  Disclosure Requirements and Red Flags (CFA Level 1): Core Disclosure Requirements Under IFRS and US GAAP, Nature and Purpose of the Arrangements, and Maximum Exposure to Losses. Key definitions, formulas, and exam tips.
• Sale-Leaseback Transactions and Their Impact
  Sale-Leaseback Transactions and Their Impact (CFA Level 1): Why Companies Engage in Sale-Leaseback Transactions, Economic Substance vs. Legal Form, and Accounting Treatment Under IFRS 16 and ASC 842. Key definitions, formulas, and exam tips.
• Factoring of Receivables and Securitizations
  Factoring of Receivables and Securitizations (CFA Level 1): Big Picture and Key Principles, Factoring of Receivables, and With Recourse vs. Without Recourse. Key definitions, formulas, and exam tips.
• Structured Financing Arrangements
  Structured Financing Arrangements (CFA Level 1): Key Concepts in Structured Financing, Common Types of Structured Financing Arrangements, and Where to Look for Disclosure. Key definitions, formulas, and exam tips.
• Repo Transactions and Off-Balance-Sheet Implications
  Repo Transactions and Off-Balance-Sheet Implications (CFA Level 1): Key Concepts in Repurchase Agreements, When Is It On-Balance-Sheet?, and Allure (and Risk) of Off-Balance-Sheet Classification. Key definitions, formulas, and exam tips.
• Industry Examples of Off-Balance-Sheet Structures
  Industry Examples of Off-Balance-Sheet Structures (CFA Level 1): Airlines and Shipping: Leveraging Operating Leases, Quick Anecdote, and Technology and Pharmaceutical: R&D Partnerships and SPEs. Key definitions, formulas, and exam tips.