USA ASC845 Inventory Exchanges

Feb 4, 2019
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United States
ASC 845 specifically applies to inventory exchanges with the SAME counterparty. Sometimes there are exchanges with two different parties; however, the substance and intent of the exchange is the same as if it were with the same counterparty.

From a business standpoint it would be helpful to account for transactions with more than one counterparty in the same way as when there is only one counterparty. Unfortunately, I'm coming to the conclusion that I can't safely support that argument.

In favor of treatment under ASC845
1. Intent is the same as if only with one counterparty
2. All transactions are entered into in anticipation of one another

Obstacles to treatment under ASC845
1. Deals run through a broker and are not papered - therefore not legally contingent upon one another
2. Each deal in isolation (because they aren't with the same counterparty) has 100% cash consideration rather than just small or no amount of boot
3. Not the same counterparty
4. When making a decision to exchange inventory amongst multiple rather than just one other counterparty, there is usually some additional financial advantage though it would be small/immaterial.

Anyone face anything like this or have thoughts?


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