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Worked-example setupScope and assumptions
- Linden Peak Instruments is fictional; all amounts are whole US dollars and periods are annual teaching periods.
- The gross receivable population, four aging pools, historical rates, current-condition and forecast adjustments, expected recoveries, and reporting-date evidence are supplied solely for calculation practice.
- The $1,000 recovery enters the stipulated allowance rollforward and is not added to ending gross receivables; the linked reinstatement and cash entry are outside the bounded gross schedule.
- The zero-coupon note has $121,000 face due in two years, no cash coupons, and a stipulated 10 percent annual effective yield.
- The $100,000 transfer is stipulated to qualify as a sale and its holdback and recourse amounts are supplied; the $150,000 transfer is independently stipulated as a secured borrowing. No calculation decides Topic 860 control.
- Period
- One receivable reporting period and a two-year note schedule
- Units
- US dollars and annual rates
- Rounding
- Whole-dollar display; retain full precision for rates, present value, and effective interest
Problem
Close a $330,000 gross receivable population through a four-pool expected-loss matrix and allowance rollforward. Separately measure a $121,000 zero-coupon note and compute two receivable-transfer paths whose accounting classifications are stipulated.
The model verifies numbers under supplied pool, rate, yield, and transfer-path inputs. It cannot establish model design, forecast evidence, legal isolation, control, or disclosure compliance.
Build gross and net receivables
$300,000 opening gross + $900,000 sales − $850,000 cash − $20,000 writeoffs
= $330,000 ending gross receivables
| Aging pool | Exposure | Adjusted rate | Expected loss |
|---|---|---|---|
| Current | $180,000 | 0.5% | $900 |
| 1–30 days | 80,000 | 1.5% | 1,200 |
| 31–60 days | 40,000 | 6.0% | 2,400 |
| 61+ days | 30,000 | 20.0% | 6,000 |
| Total | $330,000 | $10,500 |
The required ending allowance is $10,500. Opening allowance of $9,000 plus $20,500 expense, less $20,000 writeoffs, plus $1,000 recoveries equals that amount. Net receivables are $319,500.
Accrete the note
| Date | Opening carrying amount | Effective interest | Cash coupon | Ending carrying amount |
|---|---|---|---|---|
| Initial | $100,000 | |||
| End Year 1 | $100,000 | $10,000 | — | $110,000 |
| End Year 2 | 110,000 | 11,000 | — | 121,000 |
The schedule ties to face at maturity. It does not prove that 10 percent is the right market yield or that $121,000 will be collected.
Keep sale and borrowing paths separate
For the stipulated sale, $92,000 cash plus $5,000 holdback less $2,000 recourse and $1,000 costs gives $94,000 of net recognized consideration. Compared with the $95,000 net carrying amount transferred, the loss is $1,000.
For the stipulated secured advance, record $120,000 cash and a borrowing. The $150,000 receivable pool and $7,500 allowance remain; derecognized receivables and sale result are both zero.
Verification boundary
A correct tie can coexist with an omitted invoice, stale rate, double-counted overlay, unsupported yield, or failed transfer condition. Review population, evidence, authority, and approval separately from arithmetic.
Quantitative companions
Choose from 2 ways to work with this calculation.
Verified calculation · receivables credit loss analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- aging pools
- 4 fields
Inspect data
{
"current": {
"current_condition_adjustment": 0,
"exposure": 180000,
"forecast_adjustment": 0,
"historical_loss_rate": 0.005,
"reported_expected_loss": 900
},
"days_1_30": {
"current_condition_adjustment": 0,
"exposure": 80000,
"forecast_adjustment": 0,
"historical_loss_rate": 0.015,
"reported_expected_loss": 1200
},
"days_31_60": {
"current_condition_adjustment": 0.01,
"exposure": 40000,
"forecast_adjustment": 0.01,
"historical_loss_rate": 0.04,
"reported_expected_loss": 2400
},
"days_61_plus": {
"current_condition_adjustment": 0.03,
"exposure": 30000,
"forecast_adjustment": 0.05,
"historical_loss_rate": 0.12,
"reported_expected_loss": 6000
}
}- cash collections
- 850,000
- credit sales
- 900,000
- notes
- 1 field
Inspect data
{
"zero_coupon_note": {
"face_value": 121000,
"market_annual_rate": 0.1,
"periods": 2,
"reported_ending_carrying_amount": 121000,
"reported_initial_carrying_amount": 100000,
"stated_annual_rate": 0
}
}- opening allowance
- 9,000
- opening gross receivables
- 300,000
- recoveries
- 1,000
- reported credit loss expense
- 20,500
- reported ending allowance
- 10,500
- reported ending gross receivables
- 330,000
- reported ending net receivables
- 319,500
- transfers
- 2 fields
Inspect data
{
"qualifying_sale": {
"accounting_path": "sale",
"associated_allowance": 5000,
"cash_proceeds": 92000,
"holdback_asset": 5000,
"receivables_transferred": 100000,
"recourse_obligation": 2000,
"reported_transfer_result": -1000,
"transfer_costs": 1000
},
"secured_advance": {
"accounting_path": "secured_borrowing",
"associated_allowance": 7500,
"cash_proceeds": 120000,
"holdback_asset": 0,
"receivables_transferred": 150000,
"recourse_obligation": 0,
"reported_transfer_result": 0,
"transfer_costs": 0
}
}- writeoffs
- 20,000
Recomputed result
| Measure | Value |
|---|---|
| credit loss expense | 20,500 |
| current expected loss | 900 |
| days 1 30 expected loss | 1,200 |
| days 31 60 expected loss | 2,400 |
| days 61 plus expected loss | 6,000 |
| ending allowance | 10,500 |
| ending gross receivables | 330,000 |
| ending net receivables | 319,500 |
| qualifying sale net carrying amount | 95,000 |
| qualifying sale transfer result | -1,000 |
| secured advance derecognized receivables | 0 |
| secured advance transfer result | 0 |
| total aging pool exposure | 330,000 |
| zero coupon note initial carrying amount | 100,000 |
| zero coupon note maturity carrying amount | 121,000 |
| zero coupon note period 1 ending carrying amount | 110,000 |
| zero coupon note period 1 interest revenue | 10,000 |
| zero coupon note period 2 interest revenue | 11,000 |