BU387 Study Guide - Final Guide: Historical Cost, Asset, Deferred Income
Document Summary
Restricted cash not available for use, but bank can use these funds. If material, must be segregated from cash. Receivables can be trade receivables" (a/r or n/r) or non-trade receivables" (government/dividend/interest receivables) Nrv of ar = gross ar - afda - allowance for sales returns and allowances. Given ,000 in sales with terms (2/10, n/30): Estimating uncollectible accounts: allowance procedure only, mix of procedures. Can use % of receivables or aged receivables methods. At year end, 9,900 won"t be collected and the balance of the allowance is ,500. Notes receivable contain interest a) stated rate of interest b) zero interest bearing. ,000 9-month note is issued, 8% is implied int. Interest earned each year is at coupon rate bus n/r is discounted at market rate. Long term loans receivable recognized at fair value. Microsoft issues a ,000, 10% 3-year note, market rate is 12% Annual interest payments are ,000 (,000 x 10%)
