On April 1 of the Current Year, Troubled Company Factored

question 66

Multiple Choice

On April 1 of the current year, Troubled Company factored receivables with a carrying value of $85,000 for $60,000 in cash from Scrooge Lenders. The transfer was made without recourse. On April 1, Troubled would:

• A) Credit deferred interest expense for $25,000.
• B) Credit factored accounts receivable for $85,000.
• C) Debit discount on liability for $25,000.
• D) Debit loss on sale of receivables for $25,000.

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Definitions:

Canadian Law

The legal framework within Canada, including the constitution, statutes, regulations, and common law that governs the country and its citizens.

Solvency

The ability of an entity to meet its long-term financial commitments and obligations.

Restructuring

The process of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable or better organized for its present needs.

Divestiture

The action of a company selling or disposing of an asset or subsidiary as a strategic business decision.