The movement of an off-balance-sheet asset or liability to an on-balance-sheet item is dependent on the occurrence of a contingent event.

Question

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An off-balance-sheet asset or liability can only be moved to an on-balance-sheet item when a contingent event occurs. For example, a loan guarantee may be off-balance-sheet until the borrower defaults, at which point it becomes a liability that must be recorded on the balance sheet.

The Movement of an Off-Balance-Sheet Asset or Liability to an On-Balance-Sheet