ANSWER KEY Analysis Case 7-8 Financing with receivables
Analysis Case 7-8 Financial institutions have developed a wide variety of methods for companies to use their receivables to obtain immediate cash. The methods differ with respect to which rights and risks are retained by the transferor (the original holder of the receivable) and those passed on to the transferee (the new holder, usually a financial institution).
Required:
1. Describe the alternative methods available for companies to use their receivables to obtain immediate cash.
2. Discuss the alternative accounting treatments for these methods.
