All of the Following Statements Regarding Valuation of Receivables Under

question 95

Multiple Choice

All of the following statements regarding valuation of receivables under U.S. GAAP and IFRS are True except:

• A) Both require the allowance method for uncollectibles unless uncollectibles are immaterial.
• B) Both require that receivables be reported net of estimated collectibles.
• C) Both require that the expenses for estimated collectibles be recorded in the same period revenues generated from those receivables are recorded.
• D) Both allow using percent of sales, percent of receivables, or aging of receivables to estimate uncollectibles.
• E) Both require that the expense related to uncollectibles be recorded when the receivable is determined to be uncollectible.

---

Definitions:

Direct Financing Lease

A leasing arrangement where the lessor purchases an asset and leases it to the lessee, effectively acting as a financier by not transferring ownership.

Operating Lease

An agreement permitting the utilization of a property without transferring ownership rights to it.

Lessor

The party in a lease agreement that owns the asset and grants the lessee the right to use the asset in return for lease payments.

Bargain Purchase Option

A lease clause allowing the lessee to purchase the leased asset at a price significantly lower than its expected fair market value at the end of the lease term.