When should a transfer of receivables be recorded as a sale? The buyer surrenders control of the receivables to the seller. The transferor does not maintain effective control over the transferred assets through an agreement to repurchase or redeem them prior to their maturity. The transferor maintains effective control over the transferred assets through an agreement to repurchase or redeem them prior to their maturity. The transferred assets are isolated from the transferor.

The code for transfer of receivable provisions, allows creditor of a debt to have the right to transfer his/ her receivable right to another person, provided that the transaction is permitted by the law/ contract nature of business. Transfer of receivables permit the third person/ party to be included in the relationship that exist between debtor and creditor, and this allows him/ her to near the title of creditor.The receivable must be an existing one before the receivable transfer can be possible. It should be noted that for transfer of receivables be recorded as a sale, The transferor does not maintain effective control over the transferred financial asset or third party beneficial interest in the asset.

swatiupadhyay714 swatiupadhyay714 · Answer 2 · 2021-12-10T11:46:53+01:00

Receivables, also defined as accounts receivable, are debts outstanding to a company by customers for goods or services that have been used or produced but have not yet been paid for.

Receivables are produced when a corporation extends a line of credit to a client, and they are recorded as current assets on the balance sheet.

The transferor has no effective control over the transferred financial asset or even the asset class third-party advantageous interest.

The reason for the correct answer is:

The code for transfer of receivable provisions permits a borrower's creditor to transfer his or her receivables right to another person if the transaction is permitted by law/contract nature of business.

Transfer of receivables permits a third party to be included in the debtor-creditor relationship, allowing him or her to come close to holding the title of creditor.

Before a payable transfer may actually occur, the receivable should already exist.

It is important to focus on in order for a transfer of receivables to be recorded as a sale, the grantor must not have effective control over the transmitted capital product or a third-party advantageous interest in the asset.

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