Please provide a short explanation of this study.

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 GAAP 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).