The factored trade receivables

This topic has 5 replies, 2 voices, and was last updated 9 years ago by MikeLittle.

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December 3, 2016 at 7:43 pm #353512
coop
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Hello sir,

the factored trade receivables sold without recourse to the seller, why they are derecognized?

doesn’t the selling contain the Non-collectible receivables risk? it is a true transaction,
the financier will not return to the seller .

Thanks
December 3, 2016 at 8:42 pm #353521
MikeLittle
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If they’re moved on without recourse, that means the factor takes on the risk of non-collection

So all the risks and rewards are transferred

OK
December 3, 2016 at 8:55 pm #353527
coop
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So, the transaction without recourse, should be recognised ?
December 3, 2016 at 8:58 pm #353530
MikeLittle
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Yes, because the receivables have been sold and there’s no recourse
December 3, 2016 at 9:05 pm #353534
coop
Participant
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Is the following statement true ?

an example of faithful representation :

” Derecognising factored trade receivables sold without recourse to the seller”
December 4, 2016 at 8:15 am #353609
MikeLittle
Keymaster
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A better way of expressing the same sentiment would be:

“Not treating as a disposal the factored trade receivables sold with recourse to the factor”
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