case7-9?required3.
Financial instruction have developed a wide variety of methods for companies to use their receivables to obtain immediate each. The methods differ with respect to which rights and risks are obtained by the transferee (the original holder of the receivable) and those passed on to the transferee(the new holder, usually a financial institution). Required: Describe the alternative methods available for companies to use their receivables to obtain immediate cash. Discuss the alternative accounting treatment for those method. Search on the Internet for the 2008 annual report for Sanofi-Aventis. Find the accounts receivable footnote. Required: Sanofi-Aventis subtracts "impairment" from .the grass value of accounts receivable to obtain the net value. Interpret the impairment of (E88) in 2008. To what extent does Sanofi-Aventis factor or securize account receivable? How do you know? Assume that Sanofi-Aventis decided to increase the extent to which it securitizes its account receivable, changing to a policy of securitizing accounts receivable immediately upon making a sale and treating the securitizion as a sale of accounts receivable Indicate the likely effect of that change in policy on Accounts receivable in the period of the change Cash flow from operations in the period of the change Accounts receivable in subsequent periods Cash not from operations in subsequent periods Given your answers to requirement 3. could a company change the extent to which it factors or securitizes receivable to create one-time changes in its cash flow? Explain. You are spending the summer working for a local wholesale furniture company. Samson Furniture. Inc The company is considering a proposal from a local financial institution. Old Reliant financial to factor Samson's receivables. The company controller is unfamiliar with the prevailing authoritative guidance that deals with accounting for the transfer of financial assets and has asked you to do some research The controller wants to make sure the arrangement with the financial institution is structured in such a way as to allow the factoring to be accounted for as a sale. Old Reliant has offered to factor all of the company's receivables on a "without recourse" basis. Old Reliant will remit to Samson 90% of the factored amount, collect the receivables from Samson's customers, and retain the remaining 10% until all of the receivables have been collected When Old Reliant collects all of the receivables, it will remit to Samson the retained amount, less a 4% fee (4% of the total factored amount). Required: Explain the meaning of the lerni without recourse. Access the relevant authoritative guidance on accounting for the transfer of financial assets using the website of the IFRS Foundation and the IASB (hltp-7/w ww.ifrs.org/IFRSc/IFRS.html. What conditions must be met for a transfer of receivables to be accounted for as a sale (or in accounting terms, "derecognized"? What is the specific citation that Samson would rely on in apply mg that accounting treatment'' Assuming that the conditions for treatment as a sale are met. prepare Samson's journal entry lo record the factoring of $400,000 of receivables. Assume that the fair value of the last 10% of Samson's receivables is equal to $25,000. An agreement that both entitles and obligates the transferor. Samson, to repurchase or redeem transferred assets from the transferee. Old Reliant maintains the transferor's effective control over those assets, how should the transfer be accounted for? Provide the specific citation relevant to this situation. The table below contains selected financial information included in the 2009 financial statements of Del Monti Foods Co. and Smithfield Foods Inc
