Transferor of accounts receivable

Assignment Help Financial Accounting

Reference no: EM133209404

Sale/Transfer of Accounts Receivable

Assuming that the Transferor of Accounts Receivable follows US GAAP, which of the following would prevent the Transferor of Accounts Receivable from recording the transaction as a "Sale"?

The maturity date of the receivables transferred is less than 60 days from the date of the transaction.

The "buyer" of the receivables is NOT allowed to resell the receivables.

Both A and B would PREVENT the Transferor of the Accounts Receivable from recording the transaction as a sale.

None of the above.

Conceptual Framework - Consistency

2. Which of the following examples would demonstrate the accounting concept of "Relevance"?

BC, Incorporated reported Basic Earnings Per Share of $ 0.37 for the quarter ending June 30, 2020. Prior to the announcment, the "market consensus" was that BC would announce Basic Earnings Per Share of $ 0.37.

In their notes to the financial statements, Debtor Company discloses that they are in compliance with all of their "debt covenants". If they had NOT been in compliance, the investors who owned bonds that had been issued by Debtor Company could require Debtor Company to pay of $ 10,000,000 of bonds within 60 days after the end of Debtor's fiscal year.

Both A and B illustrate the conceputal accounting topic of "Relevance"

Neither A nor B illustrate the accounting concept of Relevance.

Shareholders' Equity

3. On December 31, 2020, Buyback Company had a total of 40,000 shares of $ 1 Par Value Common Stock in their "Treasury", which they had repurchased at an average price of $ 25 per share. On February 1, 2021, 10,000 of these shares were resold on the market, and Buyback Company received a total of $ 300,000 in cash from the sale. If Buyback Company uses the "average cost" method to record treasury share sales, what is the total change in Shareholders' Equity as a result of the February 1, 2021 transaction?

Total Shareholders' Equity increases by $ 50,000

Total Shareholders Equity decreases by $ 50,000

Total Shareholders' Equity increases by $ 300,000

Total Shareholders' Equity decreases by $ 300,000

None of the above

Share-Based Compensation

4. On January 1, 2019, Alignment Corporation decided to issue their Senior Executive team Stock Appreciation Rights (SARs). In total, the Senior Executives would receive 500,000 SAR's with an exercise price of $ 40 per share. The exercise price was equal to the market price of Alignment Corporation common stock on January 1, 2019. In accordance with the terms of the grant, Executives had to remain an employee of Alignment Corporation for a total of four years in order to be able to exercise the SARs. Whenever an executive decided to exercise his/her SARs, the executive would be paid in cash. The SARs expired at the end of ten years, on December 31, 2018.

The stock price of Alignment Corporation common stock on December 31, 2019 was $ 50 per share, and the stock price of Alignment Corporation common stock on December 31, 2019 was $ 56 per share.

Assuming that Alignment Corporation uses the "intrinsic value" of the SARs as a measure of their "fair value", how much compensation cost, if any, should Alignment report for the fiscal year-ending December 31, 2020?

$ 0

$ 1,250,000

$ 2,000,000

$ 2,750,000

None of the above.

Reference no: EM133209404

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