What do firms use to record the sales value of a transaction when a note receivable has either an unreasonable rate of interest or no interest rate stated?
What do firms use to record the sales value of a transaction when a note receivable has either an
unreasonable rate of interest or no interest rate stated?
A.Firms uses the cost of the goods or services provided plus a mark-up to record the sales value of a transaction when a note receivable has either an unreasonable rate of interest or no interest rate stated.
B.
An observed market price is the most reliable evidence of an asset’s fair value. If a company receives a note in exchange for goods or services, assume the note’s present value is the fair value of the goods or services provided. Fair value estimates are based on the market value of the goods or services provided, or the note. If a company cannot obtain the fair value of the goods or services, the present value of the note is found using the market rate of interest.
C.
An observed market price is the most reliable evidence of an asset’s fair value. Fair value estimates are based on the market value of the goods or services provided, or the note. If a company cannot obtain the fair value of the goods orservices, the present value of the note is found using the stated rate of interest.
D.
Firms uses the face value of the note to record the sales value of a transaction when a note receivable has either an unreasonable rate of interest or no interest stated.
How do companies account for receivables that are factored?
A.Receivables that are factored either with or without recourse should be accounted for as a sale, or a secured borrowing. In order to be recognized as a secured borrowing, three conditions must be met.
B.
Receivables that are factored either with or without recourse should be accounted for as a sale, or a secured borrowing. In order to be recognized as a sale, three conditions must be met.
C.
Receivables that are factored with recourse should be accounted for as a sale. Receivables that are factored without recourse should be accounted for as a secured borrowing.
D.
Receivables that are factored without recourse should be accounted for as a sale. Receivables that are factored with recourse should be accounted for as a secured borrowing.
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