The FASB Specified in Statement No

question 57

Multiple Choice

The FASB specified in Statement No.140 three conditions that must be met if a transfer of receivables is to accounted for as a sale.Which of the following is not one of the three conditions specified?

• A) The transferred assets have been isolated from the transferor.
• B) The transferor's obligation under the recourse provisions can be reasonably estimated.
• C) The transferee has the right to pledge or exchange the transferred assets.
• D) The transferor does not maintain effective control over the assets through an agreement to repurchase the assets before their maturity.

---

Definitions:

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not affect future decision-making but often do.

External Review

An evaluation or assessment conducted by individuals or entities outside of an organization to ensure objectivity and impartiality, often focusing on processes, products, or financial health.

Framing Bias

A cognitive bias where people react differently to a particular choice depending on how it is presented, such as a loss or gain.

Risk-Averse

A tendency to avoid taking risks, preferring safer or more predictable outcomes over uncertainty.