BUS 420 Chapter Notes - Chapter 9: Financial Statement, General Ledger, Deferred Income

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 420
• Professor: Arsineh Garabedian

Document Summary

Using assets transferred to them by their sponsors, this can secure lower cost debt. An entity to accomplish a very specific business activity financing for the sponsor, because. The credit risk is limited to the spe"s assets, not the broader assets of the sponsor. The business activity of the spe is restricted. With the debt proceeds, the spe can pay the sponsor for the transferred assets. The sponsor is monetizing previously illiquid assets, by turning them into cash. The sponsor has created a spe in monetize a million credit card at a discount of million. The order to receivables asset sponsor now has exchanged a non-cash asset of million for cash of million obtained by the. Before gaap changes were made, the assets, liabilities, and the results of the operation were frequently not consolidated, although the sponsor effectively controlled the spe by governing agreements.