Thrill Company holds a portfolio of receivables with carrying amount of P2,000,000. The company enters into a factoring arrangement with Reliable Company under which it transfers the portfolio via an assignment to Reliable Company in exchange for P1,800,000 of cash. All sums collected from debtors are paid by Thrill Company to a specifically nominated bank account opened by Reliable Company. 

Thrill Company agrees to reimburse Reliable Company in cash for any shortfall between the amount collected from the receivable and consideration received of P1,800,000. Once the receivables have been repaid, any sums collected above P1,800,000 less any interest on the initial payment the date the debtors pay, will be paid to Thrill Company. 

What amount of receivable should Thrill Company continue to recognize immediately after the transfer?

Answer rating: 100% (QA)

In case of factoring arrangement it is a financial transaction in which a company sells its accounts ... View the full answer