To obtain cash quickly, DebCo. sold $750,000 of its receivables to Finco., with recourse. As the accountant for DebCo., what issues do you need to resolve in order to determine the appropriate accounting treatment?
What will be an ideal response?
Selling receivables "with recourse" means that the debtor must accept the return of any uncollectible receivables that were transferred. ASC 860 specifies that a transfer of financial assets is considered a sale only if the transferor has surrendered control over the transferred assets. Selling the receivables with recourse does not remove ultimate control from the debtor.
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The voucher system of control:
A. Is a set of procedures and approvals designed to control cash receipts and the acceptance of liabilities. B. Establishes procedures for verifying, approving, and recording liabilities for eventual cash payment. C. Applies only when multiple purchases are made from the same supplier. D. Establishes procedures for receiving checks for the sale of verified, approved, and recorded activities. E. Is required in large companies but not beneficial for small to mid-sized companies.
While startups can be flexible in their model, what should be the general guide for existing models?
a. Existing models should not be changed. b. Existing models should be replaced frequently. c. Organizations should be prepared to adjust their existing model as markets change. d. Existing models require annual updating.
A system fails 10 times in 100 hours of operation. The failure rate of the system is ______.
a. 10 hours b. 29 hours c. 32 hours d. 55 hours
The Harpers (a black family) purchased a home with financing through Union Savings Association. During the first year, two of the Harpers' payment checks bounced but were immediately covered. Mr. Harper then lost his job and attempted to work out an
interim payment schedule with Union. Union refused and foreclosed on the property. An examination of Union's records revealed that it was the first time Union had refused an interim payment plan for a temporarily unemployed borrower. Harper filed suit, alleging Union had violated the Fair Housing Act. Union maintains the Fair Housing Act is applicable only to purchases of homes and loans, not foreclosures. What is the result?