Accounting for the Pledging of Accounts Receivable as Collateral for a Loan

question 116

Multiple Choice

Accounting for the pledging of accounts receivable as collateral for a loan requires:

• A) Reporting the receivables net of the borrowed amount.
• B) Removal of the pledged receivables from current assets and including them with noncurrent investments.
• C) Disclosure of the arrangement in notes to the financial statements.
• D) None of these answer choices are correct.

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Definitions:

Chapter 13

A section of the U.S. Bankruptcy Code allowing individuals earning a regular income to develop a plan to repay all or part of their debts.

Transnational Insolvencies

Insolvency proceedings that involve debtors, assets, claimants, and other parties of interest across multiple countries, requiring coordination between different legal systems.

Median Income

The middle value of income in a list of incomes ordered from lowest to highest, used as a standard measure to indicate the income level of a typical member of a specific group.

Chapter 13

refers to a type of bankruptcy that involves a repayment plan allowing individuals to pay back their debts over a period of time.