Principal Issues: Whether cash transfers, made within a corporate group subject to a Central Banking Arrangement, satisfy the criteria for offset presentation under GAAP, and as such, should be reflected in a balance sheet pursuant to subsection 181(3) of the Act.
Position: Whether transactions are required to be reflected in financial statements presented in accordance with GAAP remains a question of fact. However, where cash transfers are reflected in a balance sheet presented in accordance with GAAP, the net amount resulting from the operation of the Central Banking Arrangement will represent the carrying value of that item for Part I.3 purposes.
Reasons: The netting of assets and liabilities is generally permissible in situations where there exists a legal right of offset, and where the relevant parties intend to act upon that right.