ACCT 110 Lecture Notes - Lecture 30: Bank Statement, Accounts Receivable, Bank Reconciliation

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Sale with no continuing involvement by transferor. This is when it counts as a sale. Debit cash, debit due from factor (if they withhold a certain amount of what they owe), debit loss on sale of receivables (counts as the fee the factor charges), credit accounts receivable. This is the same under ifrs and aspe. Sale with continuing involvement from transferor - recourse component retained. When sold with recourse, the seller or transferor guarantees payment to the purchaser if the customer fails to pay. Under ifrs, it is not recognized as a sale as the risks and rewards are not transferred, and it is recognized as a secured borrowing. Under aspe, it uses the financial components approach where each party recognizes the components (assets and liabilities) that it controls after the sale and derecognizes the assets and liabilities that were sold or extinguished. The only difference between this and the one sold without recourse is:

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