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olga2289 [7]
2 years ago
12

Patel Inc. factors $6,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains

an amount equal to 10% of the accounts receivable for possible adjustments. Patel estimates the fair value of the recourse liability at $300,000. What would be recorded as a loss on the transfer of receivables
Business
1 answer:
VMariaS [17]2 years ago
4 0

Answer:

the loss that should be recorded is $480,000

Explanation:

The computation of the amount that recorded as a a loss on the receivable transfer is shown below:

= Account receivable × finance charge + estimation of the  fair value of the recourse liability

= $6,000,000 × 3% + $300,000

= $180,000 + $300,000

= $480,000

hence, the loss that should be recorded is $480,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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