Summary-Statement of Financial Accounting Standards No.

166
Statement of Financial Accounting Standards No. 166 was issued in June 2009.
This Statement is effective as of the beginning of each reporting entitys first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period, and for interim and annual reporting
periods thereafter. SFAS No. 166 is an amendment to SFAS No. 140. Statement
166 relates to the accounting for transfer of financial assets, and the effect of a
transfer on the financial position, performance, and cash flows of an entity. The
main purpose of this statement is to remove the concept of a special purpose
entity. Additionally, on the effective date, all existing special purposes entities
must be evaluated for consolidation by reporting enterprises using the applicable
consolidation guidance. If the evaluation on the effective date results in
consolidation, the reporting enterprise must apply the transition guidance
provided in the pronouncement that requires consolidation In addition, the
statement defines for the user what is participating interest and account for the
transfer of a portion of a financial asset. These participating interest is
determined if the entity establishes proportionate ownership rights with equal
priority to each participating interest holder however, it does not entitle any
participating interest holder to receive cash before any other participating
interest holder. This statement requires transferors to recognize and initially
measure at fair value all assets obtained and liabilities incurred as a result of a
transfer of an entire financial asset or a group of financial assets accounted for as
a sale. This statement will make reporting to investors much more transparent.
This is accomplished by having companies recognize the transferred financial

assets that they normally would not have recognized. Ultimately, companies are
required to put in a disclosure about the risk that a transferor is still exposed to.