Receivables

DEFINITION

Financial assets that contains a contractual right to receive cash

INITIAL MEASUREMENT

Fair Value + Transaction Costs (DACs)

SUBSEQUENT MEASUREMENT

Amortized Cost (AC)

TRADE RECEIVABLE

• Sale in ordinary course of business

• Current asset

  • 1 year and Operating Cycle (Longer)

NON-TRADE RECEIVABLE

• Arises from other sources

• Current asset if within 1 year

ADVANCES TO SHAREHOLDERS

NON-CURRENT RECEIVABLE

ADVANCES TO AFFILIATES

LONG-TERM INVESTMENT

ADVANCES TO SUPPLIERS

CURRENT ASSET

SUBSCRIPTION RECEIVABLE

• GR

  • DEDUCTION FROM SHE (CONTRA EQUITY)

• XPN

  • UNLESS SHORT-TERM (CURRENT RECEIVABLE)

DEBIT BALANCE IN ACCOUNTS PAYABLE

CURRENT RECEIVABLE

ACCRUED INCOME

CURRENT RECEIVABLE

CLAIMS RECEIVABLE

CURRENT RECEIVABLE

DEPOSITS

CURRENT RECEIVABLE

SPECIAL DEPOSIT ON CONTRACT BIDS

NON-CURRENT RECEIVABLE

ACCOUNT RECEIVABLE: INITIAL MEASUREMENT

Invoice price (Net of trade discount)

ACCOUNT RECEIVABLE: SUBSEQUENT MEASUREMENT

NRV = Gross balance less allowances

ALLOWANCES

• Allowance for sale returns

• Allowance for sales discount

• Allowance for freight charges

• Allowance for doubtful accounts

FOB SHIPPING POINT

BUYER

FOB DESTINATION

SELLER

FREIGHT COLLECT

BUYER

FREIGHT PREPAID

SELLER

FOB DESTINATION, FREIGHT COLLECT

DR. FREIGHT IN

CR. ALLOWANCE FOR FREIGHT CHARGE

GROSS METHOD

CASH DISCOUNT IS RECORDED ONLY WHEN TAKEN

NET METHOD

NET OF CASH DISCOUNT

AR T-ACCOUNT

ADA T-ACCOUNT

DIRECT WRITE-OFF

FOR TAX PURPOSES

ALLOWANCE METHOD

BALANCE SHEET METHOD

• PERCENTAGE OF AR (ADA, end)

• AGING (ADA, end)

INCOME STATEMENT METHOD

• PERCENTAGE OF CREDIT SALES (BDE)

MIXED METHOD

NOTES RECEIVABLE: MEASUREMENT

• SHORT-TERM

  • INTEREST BEARING

    • INITIAL:FACE VALUE

    • SUBSEQUENT: AMORTIZED COST

  • NON-INTEREST-BEARING*

    • INITIAL: FACE VALUE

    • SUBSEQUENT: AMORTIZED COST

*ASSUMING COUNTING IS IMMATERIAL, OTHERWISE PRESENT VALUE

NOTES RECEIVABLE: MEASUREMENT

• LONG-TERM

  • INTEREST BEARING (REASONABLE RATE)

    • INITIAL: FACE VALUE

    • SUBSEQUENT: AMORTIZED COST

  • INTEREST BEARING (UNREASONABLE)*

    • INITIAL: PRESENT VALUE

    • SUBSEQUENT: AMORTIZED COST

  • NON-INTEREST BEARING

    • INITIAL:PRESENT VALUE

    • SUBSEQUENT: AMORTIZED COST

*NOMINAL RATE ≠ EFFECTIVE RATE

DISCOUNT

EFFECTIVE INTEREST RATE > NOMINAL INTEREST RATE

PREMIUM

EFFECTIVE INTEREST RATE < NOMINAL INTEREST RATE

DISCOUNT

FACE AMOUNT > PRESENT VALUE

PREMIUM

FACE AMOUNT < PRESENT VALUE

DISCOUNT

ORIGINATION FEES > DIRECT ORIG. COST

PREMIUM

ORIGINATION FEES < DIRECT ORIG. COST

DISCOUNT

AMORTIZATION

• ADDED TO CARRYING AMOUNT

PREMIUM

AMORTIZATION

• DEDUCTED TO CARRYING AMOUNT

PV OF 1

(1.rate / n)

PV ORDINARY ANNUITY OF 1

((1.rate / n) – 1)

PV ANNUITY DUE OF 1

(((1.rate / n) – 1) / r) x 1.r

INTERPOLATION

x% – lower % / higher% – lower%

LOAN RECEIVABLE: MEASUREMENT

• INITIAL

  • FACE VALUE + DOC (DACs) - OF (UII)

• SUBSEQUENT

  • AMORTIZED COST

IMPAIRMENT LOSS

CA OF LR (CA + ACCRUED INTEREST)

LESS: PV OF RECOVERABLE AMOUNT (EV OF FUTURE CASH FLOW AT ORIGINAL EIR)

RECEIVABLE FINANCING

• PLEDGE/HYPOTHECATION (AR)

• ASSIGNMENT (AR)

  • NOTIFICATION BASIS

  • NON-NOTIFICATION BASIS (SILENT)

• FACTORING (AR)

  • WITH RECOURSE (SILENT) - DERECOGNIZE

  • WITH RECOURSE - NO G/L

• DISCOUNTING (NR)

  • WITHOUT RECOURSE - DERECOGNIZE

  • WITH RECOURSE (SILENT)

    • CONDITIONAL SALE (SILENT)

    • SECURED BORROWING - NO G/L

NET PROCEEDS ON PLEDGE

NET PROCEEDS ON ASSIGNMENT

NET PROCEEDS ON FACTORING

NEED PROCEEDS ON DISCOUNTING