Illustrate what would be recorded as a gain

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Reference no: EM13130975

What formula or steps do I follow to get $240,000?

Sun Inc. factors $3,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $150,000. What would be recorded as a gain (loss) on the transfer of receivables? Loss of $240,000.

Reference no: EM13130975

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