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Different contractual provision of foxtrot trade receivables

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Question: Foxtrot Co. (Foxtrot) plans to sell its trade receivables to Hotel Bank to raise immediate cash for operating purposes. Hotel Bank has proposed several different contractual provisions for its purchase of Foxtrot's trade receivables. Which of the following contractual provisions would independently prevent Foxtrot from derecognizing the entire portfolio of trade receivables upon sale to Hotel Bank?

a. Hotel Bank would be permitted to sell Foxtrot's trade receivables to an independent third party.

b. Foxtrot's customers owing the trade receivables would be notified by Foxtrot to make all related payments to Hotel Bank.

c. Hotel Bank would pay cash to Foxtrot at nominal value of its trade receivables less a 7% discount to cover risk that Hotel Bank would not collect all the proceeds from the receivables.

d. Hotel Bank would have no recourse from Foxtrot for its trade receivables not collected.

Reference no: EM131759387

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