ACC E272 Lecture Notes - Lecture 4: Credit Risk, Finance Charge, Accounts Receivable
Document Summary
Companies have the option to use fair value as the basis of measurement. It reflects the current cash equivalent value of financial statements. If companies choose the fair value option, the receivables are recorded at fair value, with unrealized holding gains or losses reported as part of net income. Unrealized holding gain or loss- net change in the fair value of the receivable from one period to another, exclusive of interest revenue. Value these receivables at fair value in all future periods in which holds these receivables. In order to accelerate the receipt of cash from receivables, the owner may transfer a/r or. Normally, we collect principal of a/r or n/r upon maturity. Providing sales financing for customers is virtually mandatory in many industries. The holder may sell receivables b/c money is tight and access to normal credit is. Billing and collection of receivables are often time consuming and costly. Sale of receivables (get cash, give up receivable)
