PSLIC Resolution Fund's Financial 17. Disclosures about sh and cash equivalents are short-term, highly liquid investments and are shown at actual or approximate fair value. The carrying amount of accounts payable, liabilities incurred from thrift resolutions and the estimated liabilities for assistance agreements approximates their fair value due to their short maturities or comparisons with current interest rates. It was not practical to estimate fair values of net receivables from thrift resolutions. These assets are unique, not intended for sale to the private sector and have no established market. The FDIC believes that a sale to the private sector would require indeterminate, but substantial discounts for an interested party to profit from these assets because of credit and other risks. Additionally, a discount of this proportion would significantly increase the cost of bank resolutions to the FRF. Further, comparisons with other financial Instruments do not provide a reliable measure of their fair value. Due to these and other factors, the FDIC cannot determine an appropriate market discount rate and, thus, is unable to estimate fair value on a discounted cash flow basis. As shown in Note 4, the carrying amount is the original amount advanced not of the estimated allowance for loss, which is the estimated cash recovery value. The majority of the net investment in corporate-owned assets, (except real estate) is comprised of various types of financial instruments (investments, loans, accounts receivable, etc.), and to a lesser degree other assets, acquired from failed thrifts. As with not receivables from thrift resolutions, it was not practical to estimate fair values. Cash recoveries are primarily from the sale of the assets which are poor quality. They are dependent upon market conditions which vary over time, and can occur unpredictably over many years following resolution. Since the FDIC cannot reasonably predict the timing of these cash recoveries, it is unable to estimate fair value on a discounted cash flow basis. As shown in Note 5, the carrying amount is the original amount advanced net of the estimated allowance for loss, which is the estimated cash recovery value. FBLIC Resolution Fund's Financial 18. Disclos Recent Finan Accounting Standards Board The Financial Accounting Standards Board (FASB) has issued Statom of Financial Accounting Standards No. 112 (Employer's Accounting for Postemployment Benefits) which the FDIC required to adopt by 1994. This new statement establishes accounting standards for employers who provide benefits to former or inactive after employment but before retirement. This statement requires employers to recognize the obligation to prov postemployment benefits. However, the FRF's obligation for benefits is not recognized because the unt cannot be ressons estimated. In May, 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan." Based upon initial study and analysis, this statement is not expected to have a material impact on the FRF when it is adopted on January 1, 1995. In May, 1993, the Financial Accounting Standards Board issued Stat of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." This statement is not expected to have a material impact on the FRF when it is adopted on January 1, 1994. Non-cash financing activities for the year ended December 31, 1993, include: 1) canceled notes payable (NWCs) of $6.5 million; and 2) collateralized loans guaranteed by the FRF decreased $90 million (100 Note 4). Non-cash financing activities for the year ended December 31, 1992, include: 1) canceled notes payable (NWCs) of $13.4 million; and 2) collateralized loans guaranteed by the FRF decreased $90 million (see Note 4). 89-497 - 95 - 27 |