Alpha Inc Has Receivables from Unrelated Parties with a Face Value

question 48

Multiple Choice

Alpha Inc. has receivables from unrelated parties with a face value of $5,000. It transfers these receivables to bank for $4,500, without recourse. It will continue to collect the receivables, depositing them in a non-interest-bearing bank account with the cash flows remitted to the bank at the end of each month. It is not allowed to sell or pledge the receivables to anyone else and is under no obligation to repurchase the receivables from bank. Which of the following is the appropriate treatment for these Accounts receivables?

• A) It should show these receivables in its Balance Sheet.
• B) It should amortize these receivables.
• C) It should derecognize these receivables.
• D) It should derecognize these receivables if it retains the interest earned on these.

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Definitions:

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation and communication systems, utilities, and public institutions.

Cultural Imperialism

The imposition or adoption of the culture of a dominant country over a less dominant one, often leading to the erosion of indigenous cultures and identities.

Colonization

The process by which a central power dominates the surrounding land and its components, often leading to cultural assimilation and economic exploitation.

Colonialism

The practice of acquiring full or partial political control over another country, occupying it with settlers, and exploiting it economically.