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NEW QUESTION: 1
A transfer of receivables with recourse, in exchange for cash should:
A. Be recorded as a sale or a borrowing transaction, depending on the provisions of the transfer agreement.
B. Not be recorded until all of the receivables have been collected.
C. Be recorded as a sale of receivables. D Be recorded as a borrowing transaction.
Answer: A
Explanation:
An entity derecognizes a financial asset or a part thereof) when it loses control of the contractual rights the asset represents. Control is lost when the entity realizes the rights to the benefits of the contract, the rights expire, or the entity surrenders the rights.
Moreover whether loss of control has occurred depends on the positions of both the transferor and the transferee. Control is not lost for example, if the entity may reacquire the asset unless it is readily obtainable in the market or the price is fair value) or when the transferor is entitled and obligated to repurchase or redeem at a price giving the transferee a lender's return. Control ordinarily is lost when the transferee may obtain the benefits of the asset for example, if the transferee may freely sell or pledge the full fair value of the asset. When the conditions above are met, the transfer of receivables with recourse is accounted for as a sale, with the proceeds of the sale reduced by the fair value of the recourse obligation a new financial liability).
NEW QUESTION: 2
When finalizing a inventory usage record, which two statuses indicate that items have been issued or transferred?
A. Shipped
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C. Staged
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E. Approved
Answer: A,C
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