What is the specific Accounting Standard Codification citation for the following situation.

Include ASC Number.

On December 28, 2017, ABC factored, on a with recourse basis, $40,000 of Accounts Receivable with Molina Finance Company. Molina charged a 3% finance charge and withheld an additional 4% to cover any possible adjustments.

Cash                                        37,200

                        Loss on Factoring                   1,200

                        Due from the Factor    1,600

                                    Accounts Receivable              40,000

ABC's controller has held this position for many years and his reasoning for the accounting choice appears to be sound, or does it? What would you require as the proper accounting for this transaction? Be sure to cite appropriate justification from the Accounting Standards Codification.