Lute Retail Ltd transfers $357,700 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2014, receiving 97% of the receivables balance as proceeds. Lute will continue to manage the customer accounts including their collection Lute estimates this obligation has a liability value of $12,200 use Accrued Liabilities account. In addition the agreement includes a recourse provision with an estimated value of $9,900 The transaction is to be recorded as a sale.

Required:

(a) Prepare the journal entry on July 11, 2014, for Lute Retail Ltd. to record the factoring of the receivables.

(b) Would the accounting treatment of the transaction change if Lute Retail followed IFRS? Explain your answer.