Receivables

Question 1

factoring

Answer 1

selling account receivable to 3rd party

Question 2

sale with or without recourse

Answer 2

with recourse: client sells receivable to 3rd party (a factor). client has to pay receivable if the customer doesn’t ay

without recourse: client sells receivable to 3rd party (a factor) and they assume the risk of customer not paying

Question 3

When a loan receivable is impaired,

Answer 3

the creditor will reduce the carrying value of the receivable to either the loan’s observable market price or the fair value of the collateral if the loan is secured. If foreclosure is probable, the receivable will be written down to the net realizable value of the collateral.

Question 4

employee loan

Answer 4

not a trade receivable, cant be written off.