Which of the following is not required for a transaction to be recorded as a sale of receivables? The factor discounts the amount remitted to the seller. The receivables are isolated from the company selling them The company selling the receivables does not maintain effective control over the receivables. The factor can pledge the receivables.
Added by Damon W.
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Step 1: For a transaction to be recorded as a sale of receivables, the seller must transfer the risks and rewards of ownership to the buyer. Show more…
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Which of the following is true when accounts receivable are factored without recourse? O a. The risks and rewards of these receivables still remain with the seller. O b. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables. O c. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. • d. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables.
Akash M.
According to standard, determining whether receivables that are transferred can be derecognized and accounted for as a sale is based on... • a. whether the seller has transferred substantially all the risks and rewards of ownership of the receivables. • b. whether the seller has transferred the receivables to factoring company or bank. • c. whether the seller has received cash from factoring company or bank. • d. whether the seller has received cash from customer.
Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because a. The amount of the discount is not material. B. Most receivables can be sold to a bank or factor. C. Most short-term receivables are noninterest bearing. D. The allowance for uncollectible accounts includes a discount element.
Madhur L.
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