Harley-Davidson provides the following footnote in its \(10-\mathrm{K}\) report relating to the securitization of receivables by its finance subsidiary, Harley-Davidson Financial Services (HDFS).

a. Describe in your own words, the securitization process employed by HDFS.

b. What benefits does Harley derive by securitizing receivables in this manner?

c. The FASB has proposed an amendment to an existing standard that, if passed, could require consolidation of the trust. What effect will this have on Harley? Will there still be a benefit to securitization? Explain.

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OFF-BALANCE-SHEET ARRANGEMENTS As part of its securitization program, HDFS transfers retail motorcycle loans to a special purpose bankruptcy-remote wholly-owned sub- sidiary. The subsidiary sells the retail loans to a securitization trust in exchange for the proceeds from asset-backed securities issued by the securitization trust. The asset-backed securities, usually notes with various maturities and interest rates, are secured by future collections of the purchased retail installment loans. Activities of the securitization trust are limited to acquiring retail loans, issuing asset-backed securities and making payments on securities to investors. Due to the nature of the assets held by the securitization trust and the limited nature of its activities... assets and liabilities of the [trust] are not consolidated in the financial statements of the Company.