Chapter 22 AR

Question 1

How is AR initially recorded

Answer 1

Fair value at the transaction date

Question 2

What is Net Realizable Value (NRV) calculated as for AR

Answer 2

AR - Allowance for Doubtful Accounts

Question 3

AR is measurable to the highest of:

Answer 3

1. The amount expected to receive if you hold AR (adjusted to PV if longer than one year)
2. Amount you receive if you sell the AR to another party
3. Amount you receive if you take any collateral to secure payment of AR

Question 4

Does a write off of an AR balance affect bad debt expense? Why?

Answer 4

It does not because the bad debt expense has already been realized/determined in the period when the sale was made.

Question 5

What is the journal entry if AR is CONFIRMED to not be collectible, if you have already made a journal entry for AFDA?

Answer 5

Reverse out AFDA (debiting AFDA), credit AR.

Question 6

DO SUMMARY PROBLEM

Answer 6

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