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AEB is considering transferring their $10M accounts receivable to a financial company on a non-notification basis where the receivables were transferred with recourse. The financing

AEB is considering transferring their $10M accounts receivable to a financial company on a non-notification basis where the receivables were transferred with recourse. The financing company is charging 10% of the total receivables. How should this transaction be accounted?

Multiple Choice

Debit finance expense $1M

Credit finance expense $1M

Debit discount on note payable $1M

Credit Note payable $10M

Debit receivable $10M

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