Regarding transaction (vi),
I'm not too sure about factored receivable. So, i just want to check if my understanding is correct.
From the transaction, am i right to say that,
-Highwood is the one selling its receivables to easy finance
-Easy finance is the one collecting the receivables on behalf of highwood
- Any outstanding receivables not collected by easy finance, easy finance can go back to highwood , and highwood will be responsible for the remaining outstanding debts. also known as with recourse
i have one qn. It's said in the transaction that any receivables outstanding after 6 months will be refunded back to Easy finance. Why is this so ? Shouldnt it be refunded to Highwood instead since its the one who sold the receivables?
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June 2011 exam question on Highwood (Single company financial statements)
Sorry there was some problem with my internet. I thought my question wasnt posted thats why i reposted. But when i refreshed i realised it was actually posted under 'factored receivables' . Very very sorry. Ignore this.
"-Highwood is the one selling its receivables to easy finance
-Easy finance is the one collecting the receivables on behalf of highwood
– Any outstanding receivables not collected by easy finance, easy finance can go back to highwood , and highwood will be responsible for the remaining outstanding debts. also known as with recourse"
yes, yes and yes
"It’s said in the transaction that any receivables outstanding after 6 months will be refunded back to Easy finance" - the money paid by Easy Finance to Highwood will be refunded by Highwood to Easy Finance
At the same time Easy Finance will transfer the receivable back to Highwood
Is that any clearer?
"Sorry there was some problem with my internet. I thought my question wasnt posted thats why i reposted. But when i refreshed i realised it was actually posted under ‘factored receivables’ . Very very sorry. Ignore this." - I don't think that I've seen the first post!
If this transaction is accounted as a loan and cash from receivables is being collected by EasyFinance, what happens to the balance of receivables in Highwood?
If the receivables are "sold" to EasyFinance and all the cash from receivables is collected by EasyFinance, what entries should be made to the balance of receivables in Highwood since the receivables won't give money Highwood anymore?
The transaction states that" Highwood received an immediate payment of $8.7m " this payment is made by who ? The customers or Easyfinance ?
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