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1. acquired $5m do we not need to take this to NCI?rather than goodwill because in the other question traveller 12/11. the additional acquisition was not included in the goodwill?
2. for debt factoring- Robby has entered into a factors agreement with the bank. hence the bank will pay $3.6m in cash to robby. in the solutions it states that should not be decrecognised the receivables because the risks and rewards of ownership have not been transferred.
does this mean that the income from receivables have not yet been received so no risk and rewards transferred to robby yet until the income has received. im soo confused.
i also dont understand the treatment of dr trade receivables 4m, CR Current liabilities 3.6 and CR RE 0.4.
thank you
Substance over form! Have you checked the course notes? There is an example specifically in the notes about factoring and, in the situation where the factor can return the receivables if not collected after a period on time, the risks and rewards of ownership (primarily the risk of non-collection) comes back to haunt Robby.
Therefore, the entry that has already been put through needs to be reversed (that’s the entry at the end of your post) and the “sale” recorded as a liability
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