Question

Accounts Receivable can be transferred to a finance company to obtain immediate cash. Derecognition is allowed...

Accounts Receivable can be transferred to a finance company to obtain immediate cash. Derecognition is allowed if:

Multiple Choice

  • We got full value for the receivables.

  • The receivables were transferred and the risks and rewards were genuinely passed to another party.

  • We have recorded a finance expense on the transfer.

  • We will continue to collect the receivable but will provide the cash to the finance company.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:

Derecognition of notes recevables and accounts receivables happens when the asset is removed from the balance sheet. It can be removed form the balance sheet when dues from receivables are completely received or The receivables were transferred and the risks and rewards were genuinely passed to another party.

Answer : Option B: The receivables were transferred and the risks and rewards were genuinely passed to another party.

Hope this helps! In case of any clarifications, kindly use the comment box below

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June...
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $900,000. Lonergan needs approximately $560,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives: Borrow $560,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount...
Slide 30-13 Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end...
Slide 30-13 Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2018, the company had accounts receivable of $1,060,000. Lonergan needs approximately $640,000 to capitalize on a unique investment opportunity. On July 1, 2018, a local bank offers Lonegan the following two alternatives: Borrow $640,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $72,000 of accounts receivable to...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $72,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $6,200). Mountain High anticipates a $4,200 recourse obligation. The bank charges a 2%...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $62,000 of accounts receivable to...
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $62,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,200). Mountain High anticipates a $3,200 recourse obligation. The bank charges a 3%...
Post-Closing Trial Balance December 31, 2018 Debit Credit Cash      18,200 Accounts receivable        3,960 Supplies        1,380
Post-Closing Trial Balance December 31, 2018 Debit Credit Cash      18,200 Accounts receivable        3,960 Supplies        1,380 Prepaid insurance           750 Prepaid rent        3,800 Furniture        5,000 Accumulated depreciation, furniture           450 Equipment        8,000 Accumulated depreciation, equipment        4,000 Accounts payable        2,700 Accrued liabilities           190 Unearned service revenue        1,900 Common shares      20,000 Retained earnings      11,850 Total      41,090      41,090 PREPARE JOURNAL ENTRIES (+ADJUSTING ONES IF NEEDED) Business Activities for January, 2019 On January 4, 2019, Linda paid the outstanding accounts payable balance from December 31, 2018. On...
11B-3 Keystone Computers & Networks, Inc. (KCN), has 933 accounts receivable, with a total book value...
11B-3 Keystone Computers & Networks, Inc. (KCN), has 933 accounts receivable, with a total book value of $10,235,457. From that population, Adams, Barnes & Co. (ABC), CPAs, selected a sample of 260 accounts (142 unique accounts) for confirmation for the year ended December 31, 20X5, as illustrated by the working paper on page 503. First and second confirmation requests resulted in replies for all but 10 of those accounts. ABC performed alternative procedures on those 10 accounts and noted no...
PREPARE JOURNAL ENTRIES FOR THE FOLLOWING. 1. January 2: Mr. Burns opened up his new company...
PREPARE JOURNAL ENTRIES FOR THE FOLLOWING. 1. January 2: Mr. Burns opened up his new company and dissolved the old one. The balances of the accounts (with the exception of fixed assets and uncollectible) were transferred over from the old business. Mr. Burns decided that he needed to invest more money into the business in order to get operational. Mr. Burns invested $2,120,000 to create stock. 2. January 3: Mr. Burns bought a cookie making machine for $500,000 from Cookie...
Part 3 __________ is the organization that enforces the Occupational Safety and Health Act (OSHA). •...
Part 3 __________ is the organization that enforces the Occupational Safety and Health Act (OSHA). • The Justice Department • • The Securities and Exchange Commission   •The Securities Exchange Commission •The Occupational Safety and Health Administration • The Food and Drug Administration Who is covered under the provision of the FLSA that mandates employees working more than 40 hours a week earn time and a half pay? • Regular salespersons • Administrative employees • Outside salespersons • Executives • Professional...
Unfortunately it’s a familiar chain of events in the mining industry: junior mining partner makes a...
Unfortunately it’s a familiar chain of events in the mining industry: junior mining partner makes a discovery in a faraway land. Junior mining company sinkssignificant amounts of capital into the ground to establish a world-class resource. The discovery attracts the interest of powerful local business concerns and/or governments. The deposit is seized under suspicious circumstances and the junior mining company’s shareholders are annihilated. This story has played out all over the world from Venezuela to Mongolia to the Democratic Republic...
Unhealthy Accounting at HealthSouth PROBLEM In 1996, key executives of HealthSouth, one of the nation’s largest...
Unhealthy Accounting at HealthSouth PROBLEM In 1996, key executives of HealthSouth, one of the nation’s largest providers of health care services, began a massive fraud that eventually amounted to $2.7 billion. HealthSouth is a textbook case of unbridled greed combined with a lack of corporate governance, which illustrates the difficult situation that auditors face when clients perpetrate a massive, collusive fraud. HealthSouth was founded in 1984 by Richard Scrushy and coworkers at Lifemark, a Houston-based company that owned and managed...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT