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kutiracing
08.02.2021 •
Business
Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $75,000 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 $6,500). Mountain High anticipates a $4,500 recourse obligation. The bank charges a 3% fee (3% of $75,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them.
Required:
1. Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been met.
2. What is the amount that Mountain High should record as Loss on Sale of Receivables
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Ответ:
Explanation:
In order to solve such problems the managers analyze the financial transactions in their systems. They first obtain the transaction number that the client received upon making the purchase. Then they find this transaction number in their system and analyze the numbers. If the transaction was a mistake or had an error they can reverse the transaction which would return the money to the client and move that transaction off of the confirmed transactions in the system.