What is the specific Accounting Standard Codification citation for the following situation. Include ASC Number. On December
Question:
What is the specific Accounting Standard Codification citation for the following situation.
Include ASC Number.
On December 28, 2017, ABC factored, on a with recourse basis, $40,000 of Accounts Receivable with Molina Finance Company. Molina charged a 3% finance charge and withheld an additional 4% to cover any possible adjustments.
Cash 37,200
Loss on Factoring 1,200
Due from the Factor 1,600
Accounts Receivable 40,000
ABC's controller has held this position for many years and his reasoning for the accounting choice appears to be sound, or does it? What would you require as the proper accounting for this transaction? Be sure to cite appropriate justification from the Accounting Standards Codification.
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson