Vaughn Manufacturing factors $5900000 of its accounts receivables with recourse for a finance charge of 5%. The finance company retains an amount equal to 9%
Vaughn Manufacturing factors $5900000 of its accounts receivables with recourse for a finance charge of 5%. The finance company retains an amount equal to 9% of the accounts receivable for possible adjustments. Vaughn estimates the fair value of the recourse liability at $225000. What would be recorded as a gain (loss) on the transfer of receivables?
| A. | Gain of $1051000. |
| B. | Loss of $225000. |
|
| C. Gain of $295000. |
| D. | Loss of $520000. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Authors: Ray H. Garrison, Alan Webb, Theresa Libby
12th Canadian Edition
1260193276, 978-1260193275
