How should Jay plc account for this transaction

Assignment Help Financial Accounting

Reference no: EM132778637

Question - Jay plc enters into an agreement to assign its portfolio of £20 million trade receivables with recourse to factor Kima. The receivables have 90-day terms. Kima agrees to pay Jay plc an initial amount of £16 million in cash for the rights to the cash flows from the receivables. Once the receivables have been repaid, Kima will pay a further sum to Jay calculated as the balance of £4 million less interest on the £16 million initial payment until the date debtors pay (at 10%) and less any defaults (defined as any debts that remain unpaid after 120 days).

Required - How should Jay plc account for this transaction? Provide the rationale for your answer and specify the nature of risks that Jay retains or transfers to Kima.

Reference no: EM132778637

Questions Cloud

How much will be collected in April : Credit sales are collected 50% in the month of sale, 30% in the 1st month following the sale, How much will be collected in April

Scope of the functions they perform especially : Describe the difficulty associated with attempting to make generalizations about law enforcement and the scope of the functions they perform especially

Prepare the necessary entry required by Emma Lavin : Prepare the necessary entry required by Emma Lavin to record the purchase of the Machine on January 1st, 2018

Original intent of fourth amendment : Do you believe that the original intent of the Fourth Amendment was to encompass searches of students in public schools?

How should Jay plc account for this transaction : How should Jay plc account for this transaction? Provide the rationale for your answer and specify the nature of risks that Jay retains or transfers to Kima

What is the regular selling price : Canadian Tire paid $143 for a humidifier. Expenses are 16% of cost and the profit is 25% of cost. What is the regular selling price

Difference in ancient and modern conceptions of liberty : According to Benjamin Constant, there is a striking difference between ancient and modern conceptions of liberty.

Make a merchandise purchases budget : Make a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June

BPCC Police Community : Discuss how technology has become an indispensable tool for law enforcement - especially in the terms of problem-oriented policing approaches.

User Account

All Pages