A disclosure technique that is used for two accounts/ line items, on the statement of financial position, that are directly connected in such a way that both have to be “cross-referenced” for clarity. For example, under current assets, accounts receivable (A/Rs) used as collateral for a bank loan shall be cross-referenced to bank loan payable (under liabilities) as follows:
On assets side:
Accounts receivable posted as collateral on a bank loan payable —– CU 50,000
On liabilities side:
Bank loan payable- collateralized by accounts receivable —- CU 35,000
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