Factoring is a type of transaction where an entity sells it customer receivables to a financial intermediarywho then in turn collects payment from the entity's customers. Many entities employ this strategy to accelerate cash collection. This course provides an overview of the accounting and reporting requirements with respect to accounts receivable factoringprograms as well as the conditions that must be met in order to recognize the transferof these financial assets as a "true sale" instead of a secured borrowing.
Learning Objectives
Upon completion of this course, you will be able to:
Recognize key characteristics as well as advantages/disadvantages of factoringarrangements;
Identify the U.S. GAAP area applicable to factoringarrangements;
List the three specific conditions that must be met for a factoringarrangement to qualify as a sale;
Recognize key evaluation considerations relating to true saleopinions;
Identify examples of continuing involvement; and
Recognize the impact from a failed sale in a factoringarrangement.
Major Topics
Advantages and Disadvantages of Factoring
Overall conditions for Sale Accounting
Level of recourse considerations
What type of language would be problamatic
Continuing Involvement
Assessment of constraints
Factoring arrangements qualifying as a sale
Derecognition guidance
Factoring arrangements not qualifying as a sale
