Use the Following Information for Questions

question 36

Multiple Choice

Use the following information for questions
On February 1, 2010, Otto Company factored receivables with a carrying amount of $200,000 to Kassim Company.Kassim Company assesses a finance charge of three percent of the receivables and retains five percent of the receivables.Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Otto Company for February.
-Assume that Otto factors the receivables on a without recourse basis.The loss to be reported is

• A)$0.
• B)$6,000.
• C)$10,000.
• D)$16,000.

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Definitions:

Restrictive Covenants

Restrictive covenants are clauses in contracts that impose limitations or conditions on one party's actions, typically used in employment and real estate to protect business interests.

Subdivisions

The act of dividing land into plots or parcels for the purpose of sale, lease, or development.

Applicability

The relevance or suitability of a law, regulation, or principle in a specific context or situation.

Zoning Ordinance

Regulations set by local governments determining how land within their jurisdiction can be used, affecting the development and use of properties.