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F7- June 2011- Q2 (VI)- Factor

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › F7- June 2011- Q2 (VI)- Factor

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by MikeLittle.
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  • Author
    Posts
  • May 4, 2015 at 4:54 pm #244036
    agriphine
    Member
    • Topics: 5
    • Replies: 5
    • ☆

    Dear sir,

    in the normal circumstances, what would have been the recording of this transaction where, we factored our receivable and we are still bearing all risk and reward? if the amount received is less than the amount of receivable. where are we recording the difference?

    May 4, 2015 at 9:10 pm #244064
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23334
    • ☆☆☆☆☆

    Your question confuses me – 🙁 sorry

    If it’s a genuine factor transaction with risks and rewards transferred, the double entry would be:

    Dr Cash
    Dr Finance Expenses
    Cr Receivables

    If it isn’t a genuine factor transaction, the entry should be:

    Dr Cash
    Cr Loan account

    and if the company has treated it as a genuine one and it isn’t, then we need to “undo” / reverse the bad entries and replace them with the correct entries

    Ok?

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