RECEIVABLES
-
Contractual right to receive cash or another financial asset from another entity
Initial Measurement: Fair Value + Transaction Costs
Subsequent Measurement: Amortized Cost
CLASSIFICATION:
Trade-arising from the sale of goods and services in the ordinary course of business
Non-trade- arising from other sources.
ACCOUNTS RECEIVABLE
Beg. Balance xx
Collections
xx
Credit Sales xx
Sales Discount xx
Sales Discount Forfeited
xx
Sales Return
xx
Write-off
xx
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
1. Direct write-off Method
Percent of A/R (ADA)
2. Allowance Method
a. Balance Sheet Method
Aging Method (ADA)
b. Income Statement Method
Percent of Credit Sales (DAE)
NOTES RECEIVABLE:
Interest Bearing
Face value
Non-interest bearing
Amortized Cost
Interest Bearing (with
Long term
reasonable interest rate)
Non-interest bearing
Present Value
*Assuming discounting is immaterial; otherwise, it should be presented in present value.
* Notes with unreasonable rate bears an interest which is not equal to the market rate of interest.
Short term
LOANS RECEIVABLE:
- Financial asset arising from loan granted by a bank or other financial institution to a borrower
or a client.
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MEASUREMENT:
Initial Measurement
Face Value
Add: Direct Origination Costs
Less: Origination Fee
Initial Carrying Value
Subsequent Measurement: Amortized Cost
xx
xx
(xx)
xx
Impairment of Loans:
How to compute?
Carrying amount of loan receivable
PV of recoverable amount
Impairment Loss
xx
xx
xx
RECEIVABLE FINANCING:
Common forms of receivable
financing




Pledge/Hypothecation
Assignment
Factoring
Discounting
Formal?
Transfer of rights?
Transfer of ownership?
AR serve as security
Proceed from assignment:
Face value of loan
Less: Commission and other charges
Net proceeds from assignment
xx
xx
xx
CA of AR
Less: CA of loans payable
Equity on assigned accounts
xx
xx
xx
Gain or loss from factoring:
xx
xx
xx
xx
Selling Price
Less: CA of AR
Gain or loss on factoring
Without Recourse Basis
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Assignment
√
√
x
√
Specific
Equity on assigned accounts:
Proceed from factoring:
Face value of AR
Less: Commission and other charges
Factor’s holdback
Net proceeds from factoring
Forms of Discounting:
Pledge
x
x
x
√
General
xx
xx
xx
Conditional Sale
TYPES OF NEGOTIATION
With Recourse Basis
Secured Borrowing
Proceed from factoring:
Maturity Value
Less: Discount
Net proceeds from discounting
Gain or loss on discounting:
xx
xx
xx
Selling Price
Less: CA of NR
Gain or loss on discounting
xx
xx
xx
s
NOTES:
 Notes Receivable discounted is presented as contra-asset account (deduction from notes
receivable account)
 Gain or loss discounting is applicable only to without recourse basis and conditional sale
basis.
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