The company Cassimpin, S.A. of C.V. is dedicated to the sale of machinery for the textile industry, last month, it made a sale to one of its main clients for an amount of $35,700,000.00 MXN, the conditions of sale were 50% in cash and the rest on credit over a period of 90 days Given that this client operates in the textile sector, and derived from a greater entry of products of Asian origin, its sales have decreased and the use of the new equipment is very low. Due to the problems faced by the client, the company considers that it has to recognize an expected credit loss. Currently, the probability that the customer will default is 45% and the severity of the loss is estimated at 50%. It is considered that the collection will be made on the contractual expiration date.

Answer what is indicated below:

to. Explains the importance of the company recognizing the impairment of financial instruments receivable.

b. Calculate the expected credit loss.

Answer rating: 100% (QA)

a Importance of Recognizing the Impairment of Financial Instruments Receivable Recognizing the impai... View the full answer