es Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $64,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 80% of the factored amount to Mountain High and retains 20% to cover sales returns and allowances. When the bank collects the receivables, It will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,400). Mountain High anticipates a $3,400 recourse obligation. The bank charges a 1% fee (1% of $64,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the Journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been met Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. View transaction list View journal entry worksheet No 1 Event 1 General Journal Cash Finance charge expense Liability-financing arrangement Debit 560 640 Credit
es Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $64,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 80% of the factored amount to Mountain High and retains 20% to cover sales returns and allowances. When the bank collects the receivables, It will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,400). Mountain High anticipates a $3,400 recourse obligation. The bank charges a 1% fee (1% of $64,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the Journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been met Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. View transaction list View journal entry worksheet No 1 Event 1 General Journal Cash Finance charge expense Liability-financing arrangement Debit 560 640 Credit
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 16P
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