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.

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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

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