Pledges of Accounts Receivable Are Never Made on a Notification

question 3

True/False

Pledges of accounts receivable are never made on a notification basis because the lender does not trust the borrower to collect the pledged account receivable and remit these payments as they are received.

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Definitions:

Identifiable Net Assets

Assets of a company that can be clearly identified and measured, used in business combinations to determine the amount of goodwill or gain from a bargain purchase.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of the asset minus any depreciation.

Proportionate Book Value

The valuation of an entity's share in an investment, calculated based on the proportionate share of the invested entity’s book value.

Deferred Income Tax Asset

A balance sheet item that represents the difference between taxes already paid or accrued and the expected future tax payment, indicative of taxes that will be recovered in future periods.