Apply derecognition criteria of IFRS 9 and U.S. GAAP to Company B’s situation below: Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors. The historical default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank. The bank may subsequently sell or pledge these receivables. Under IFRS, should Company B derecognize this portfolio of short-term receivables? Why? Under U.S. GAAP, should Company B derecognize this portfolio of short-term receivables? Why?
Apply derecognition criteria of IFRS 9 and U.S. GAAP to Company B’s situation below: Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors. The historical default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank. The bank may subsequently sell or pledge these receivables. Under IFRS, should Company B derecognize this portfolio of short-term receivables? Why? Under U.S. GAAP, should Company B derecognize this portfolio of short-term receivables? Why?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 12C: Researching GAAP Situation Hamilton Company operates in an industry with numerous competitors. It is...
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Apply derecognition criteria of IFRS 9 and U.S. GAAP to Company B’s situation below:
Company B sells a portfolio of 100 short-term receivables to a bank for cash by guaranteeing to buy back first 20 defaulted receivables at the amount due from the debtors. The historical default rates on such receivables are up to 10%. The customers are notified of the sale and pay directly to the bank. The bank may subsequently sell or pledge these receivables.
Under IFRS, should Company B derecognize this portfolio of short-term receivables? Why?
Under U.S. GAAP, should Company B derecognize this portfolio of short-term receivables? Why?
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