Otter Company has a receivable amounting to P1,200,000; Otter had previously established an Allowance for bad debts of P50,000 in connection with these receivables. Ötter Company sold these receivables with recourse for P1,060,000. Otter received P1,000,000 cash immediately from the factor. The remaining P60,000 will be received once the factor verifies that none of the receivables is in dispute. Control was surrendered by Otter. The fair value of the recourse obligation is P26,000. The loss on factoring to be recognized by Otter Company is
Otter Company has a receivable amounting to P1,200,000; Otter had previously established an Allowance for bad debts of P50,000 in connection with these receivables. Ötter Company sold these receivables with recourse for P1,060,000. Otter received P1,000,000 cash immediately from the factor. The remaining P60,000 will be received once the factor verifies that none of the receivables is in dispute. Control was surrendered by Otter. The fair value of the recourse obligation is P26,000. The loss on factoring to be recognized by Otter Company is
Chapter1: Financial Statements And Business Decisions
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