To Be Recognized as a Sale Under IFRS, Factored Receivables

question 64

True/False

To be recognized as a sale under IFRS, factored receivables do not have to be isolated.

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Definitions:

Allowance Method

An accounting technique that estimates and sets aside a portion of accounts receivable that may not be collectible, reflecting potential losses.

Credit Sales

Sales in which the payment is deferred to a future date, typically allowing the buyer to receive goods or services immediately but pay later.

Promissory Note

A financial instrument involving a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Maker

An individual or entity that creates or issues a financial instrument, such as a check or note, thereby promising to pay the amount stated.