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FAR > Receivables > Flashcards

Receivables Flashcards

1
Q

Receivable In General Measurement

Initial

Subsequent

A

Initial: Fair Value + Transaction Costs

Subsequent: Amortized Cost

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2
Q

Two Methods for Accounting for Bad Debts

A

Direct Write-off Method

Allowance Method

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3
Q

AR
What is most broad? Direct Write Off Method or Allowance Method?

A

Allowance Method

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4
Q

Allowance Method can further classified as:

A

Balance Sheet Method

Income Statement Method

Mixed

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5
Q

Acctg for Bad Debts
Allowance Method
Balance Sheet Method:

A

Percent of AR Method
Aging Method

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6
Q

Acctg for Bad Debts
Allowance Method
Income Statement Method

A

Percentage of Credit Sales Method
DAE agad

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7
Q

Note Receivable initial and subsequent Measurement:

Shorterm -IB___
-NIB____

Longterm - IB_____
- NIB______

A

ST: Face Value

LT: IB-W/ Reasonable rate: FV
IB-w/ Unresobale rate:PV
NIB:PV

All Subsequent Measurement: Amortizes Cost

With unreasonable rate means interest bering not equal to the MARKET RATE of interest

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8
Q

LOAN RECEIVABLE Measurement

A

Initial:

FV
Add: Direct Origination Costs
Less: Origination Fee
Initial Carrying Value ICV:

Subsequent: Amortized Cost

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9
Q

Impairment of Loans: PFRS 9 paragraph 5.2.2 in conjunction with PAS 39, par. 58, provides that an entity shall assess at every _____

A

End of reporting period

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10
Q

Loan Receivable
How to compute impairment loss?

A

CA of Loan Receivable
Less: PV or recoverable amount
Impairment Loss

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11
Q

Loan Receivable:

If: ICV greater than FV

Scenario:
Interest: Nominal vs. Effevtive Int.
Treatment on Amount:

A

Premium
NI greater than EI
Deduct from CA

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12
Q

Loan Receivable:

If: ICV Less than FV

Scenario:
Interest: Nominal vs. Effevtive Int.
Treatment on Amount:

A

Discount
NI less than EI
Add from CA

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13
Q

T or F?

Percentage of AR and Aging are the required ending balance of AFDA?

A

Yes. Hence the BDE for the period is Required AFDA vs. Unadjusted AFDA

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14
Q

Entry to Record Write Off and Recovery under both Direct and Allowance Method

A

Write off:
-DWOM: Dr. BDE, Cr. AR
-AM: Dr. AFDA, cr. AR

Recovery:
DWOM: Dr. AR, Cr BDE/Gain
AM: Dr. AR, Cr. AFDA

Both: Dr. Cash, Cr. AR

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15
Q

Percentage of Sales is required AFDA?

A

No.

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16
Q

The accounting for Loan Receivable is similar to Notes Reveivable except that____

A

Loan receivable typhically involved Transaction Costs

17
Q

Loan Reveivable
Explain Origination Fees, Direct and Indirect Origination Costs

A

Origination Fees - Deducted directly from loan proceeds

Direct Origination Costs - initially added to the CA of the loan

Indirect Origination Costs - outright expense

18
Q

The entry to record Orgination Fees and Direct Origination Costs

A

Orig Fees Received:
Dr. Cash, Cr. UNREARNED INT. INCOME

DOC: dr. Unearned Int. Income cr. Cash

But still note that deduct padin ang OF at add ang DOC sa ICV ng Loan Rec

19
Q

Common forms of receivable financing are:

A

Pledge
Assignment
Factoring
Discounting

20
Q

Also known as Hypothecation (postulate/assume)

A

Pledge

21
Q

An____ is a formal form of pledge in which receivable assigned are specifically identified and stated in the loan contract

A

Assignment

22
Q

Rec Financing
2 ways of assignment

A

Notification-customers are notified to make their payments directly to the assignee

Non notification basis-customers are not notified, hence, they will continue to pay to assignor

23
Q

____ is the sale of account receivable to a bank or financial institution entity

Transfer of ownership

A

Factoring

24
Q

Two types of Factoring

A

With Recourse- the transferror guarantees the payment to the factor in the event factors fail to pay

Without - the factor assumes the risk of non payment and absorbs any credit losses

25
Q

Factoring if silent

A

WITHOUT recourse

26
Q

Discounting if silent

A

WITH recourse

27
Q

Factors Holdback

A

Reserve for sales returns and discounts

Withheld percentage of transferred receivable as protection against such reduction

28
Q

Loss on factoring is equal to Finance Fee

A

TRUE

29
Q

Formula for AR Net Realizable Value

A

AR
less: AFDA
Allowance for sales return

30
Q

The Interest payable in lump sum need also to compute Present Value

A

True

31
Q

Receivable Financing - Discounting
Discount Period is____

A

The remaining period to Maturity Date

32
Q

Rec. Financing - Discounting
State the formulas:

Net Proceeds =
Maturity Value=
Discount Period=
Discount=

A

Net Proceeds= Maturity Value - Discount

Maturity Value= Principal+interest for FULL term note

Discount Period=remaining to maturity date

Discount=maturiy ValueXdiscount ratex discount perion

33
Q

Receivable Financing
Discount is same with Loss?

A

No. Loss is balancing figure! Please remember!

FAR (18 decks)

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