Lesson details
- Estimated study time
- 120 min
Learning objectives (6)
Classification is supplied only after Lesson 07's evidence work. The checked model demonstrates the two numerical systems; it does not decide which system applies.
Stipulated qualifying sale
Linden Peak transfers $100,000 gross receivables with a $5,000 associated allowance. Cash proceeds are $92,000; a $5,000 holdback asset and $2,000 recourse obligation are stipulated at their supported amounts; direct transfer costs are $1,000.
Net carrying amount transferred $95,000
Cash + holdback − recourse − costs 94,000
Loss on stipulated sale $1,000
The entry removes the gross receivables and associated allowance, records cash, holdback, recourse, costs under the applicable path, and recognizes the $1,000 loss. Later servicing, holdback settlement, recourse changes, and collections require their own schedules.
Stipulated secured borrowing
Linden Peak pledges $150,000 gross receivables with a $7,500 allowance and receives $120,000 cash. Under the supplied borrowing classification, record Cash and a borrowing; do not remove the receivables, allowance, or later collection activity and do not record a sale result. Financing fees, interest, remittances, defaults, collateral presentation, and cash-flow classification remain visible.
Parallel entries
Prepare both paths side by side. Circle every line that differs because of classification rather than arithmetic. Then list the legal and control evidence the model cannot infer and the statement and note errors caused by choosing the wrong path.