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Accounting Treatment for Factoring Receivables: A Comprehensive Guide
Author: Dr. Anya Sharma, CPA, CMA, is a Professor of Accounting at the University of California, Berkeley, with over 15 years of experience in financial reporting and analysis. Her research focuses on the complexities of short-term financing and the implications of various accounting treatments, including the accounting treatment for factoring receivables.
Publisher: This report is published by the Institute of Certified Public Accountants (ICPA), a globally recognized authority on accounting standards and best practices. The ICPA's publications are widely respected for their accuracy, clarity, and adherence to current accounting regulations.
Editor: Mr. David Lee, CA, has 20 years of experience in auditing and financial reporting, specializing in the complexities of financing transactions and the nuances of the accounting treatment for factoring receivables. He has been a lead auditor for several Fortune 500 companies and has extensive expertise in interpreting and applying relevant accounting standards.
Keyword: Accounting treatment for factoring receivables
1. Introduction: Understanding Factoring Receivables
Factoring receivables is a financing technique where businesses sell their accounts receivable (invoices) to a third party, known as a factor, at a discount. This provides immediate cash flow, relieving pressure on working capital. However, the accounting treatment for factoring receivables can be complex, varying depending on the specifics of the agreement. This report delves into the intricacies of this accounting treatment, offering a comprehensive understanding based on established accounting standards, particularly those under US GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards).
2. Types of Factoring Arrangements and Their Impact on Accounting Treatment
The accounting treatment for factoring receivables is highly dependent on the type of factoring arrangement. Two primary types exist:
Recourse Factoring: In recourse factoring, the seller (the business) retains responsibility for unpaid invoices. If the debtor fails to pay, the factor can reclaim the funds from the seller. Under US GAAP, this is generally treated as a loan, with the receivables remaining on the seller's balance sheet. The discount is recognized as interest expense.
Non-Recourse Factoring: With non-recourse factoring, the factor assumes the risk of non-payment. The seller is relieved of the responsibility for collecting unpaid invoices. This is treated as a sale of receivables under both US GAAP and IFRS. The proceeds received are recorded as cash, while the receivables are removed from the balance sheet. Any fees or discounts are recognized as a reduction in the proceeds from the sale. A crucial consideration is the determination of whether the transaction meets the criteria for a sale under the relevant accounting standards. This involves assessing the transfer of control over the receivables to the factor.
3. Accounting Entries for Factoring Receivables
The accounting entries differ significantly based on whether the factoring is recourse or non-recourse.
Non-Recourse Factoring:
Debit: Cash (Proceeds received from the factor after deductions for fees and discounts)
Debit: Loss on Sale of Receivables (If the proceeds are less than the book value of the receivables)
Credit: Accounts Receivable (Book value of receivables sold)
Recourse Factoring:
Debit: Cash (Proceeds received)
Debit: Factoring Fees Expense
Credit: Accounts Receivable (The amount of receivable factored is recorded)
Credit: Receivable from Factor (This account holds the recourse portion)
The accounting treatment for factoring receivables necessitates careful documentation of the agreement to ensure accurate financial reporting.
4. Determining the Sale vs. Loan Criteria
The critical aspect of the accounting treatment for factoring receivables lies in distinguishing whether the transaction constitutes a sale or a loan. Key factors considered include:
Transfer of Control: Has the seller relinquished significant control over the receivables? This involves assessing the seller's ongoing involvement in collecting the receivables.
Risk and Reward: Has the seller transferred the risks and rewards associated with the receivables to the factor? This includes the risk of non-payment and the potential for gains or losses.
Significant Rights: Does the seller retain any significant rights over the receivables that would prevent the transaction from being treated as a sale?
5. Disclosure Requirements
Regardless of the type of factoring arrangement, companies must disclose relevant information about factoring arrangements in their financial statements. This disclosure should include the amount of receivables factored, the terms of the agreement, and the accounting treatment applied. Transparency in disclosure is crucial for ensuring fair presentation of financial information.
6. Impact on Financial Ratios
The accounting treatment for factoring receivables has a direct impact on several financial ratios. For example, the accounts receivable turnover ratio and the current ratio will be affected depending on whether the transaction is treated as a sale or a loan. Accurate accounting is critical for a fair interpretation of the financial health of the business.
7. Tax Implications
The tax implications of factoring receivables can vary depending on the jurisdiction and specific circumstances. In some cases, the proceeds from factoring may be treated as a sale, while in others, they may be treated as a loan. Tax advice from a qualified professional is essential to ensure compliance.
8. Recent Developments and Future Trends
Recent accounting standards updates have aimed at clarifying the criteria for determining the appropriate accounting treatment for factoring receivables, emphasizing the importance of control and risk transfer. Future trends will likely involve further refinements of these standards to address the increasing complexity of financing transactions. Staying abreast of evolving accounting regulations is crucial for accurate financial reporting.
9. Conclusion
The accounting treatment for factoring receivables is a complex area with significant implications for financial reporting. A thorough understanding of the different types of factoring arrangements, the criteria for determining a sale versus a loan, and the relevant disclosure requirements is crucial for accurate financial reporting and a fair presentation of a company's financial position. This requires careful attention to detail and adherence to relevant accounting standards.
FAQs:
1. What is the difference between recourse and non-recourse factoring? Recourse factoring retains seller liability for unpaid invoices, while non-recourse factoring transfers this risk to the factor.
2. How does factoring affect a company's balance sheet? Non-recourse factoring reduces accounts receivable, while recourse factoring does not.
3. What are the key criteria for determining if factoring is a sale or a loan? The key is whether the seller has transferred control and risk and reward associated with the receivables.
4. What disclosures are required for factoring arrangements? Disclosures should include the amount factored, terms, and accounting treatment.
5. How does factoring impact financial ratios like the current ratio? Non-recourse factoring typically improves the current ratio.
6. What are the tax implications of factoring receivables? Tax implications vary depending on jurisdiction and the treatment as a sale or loan.
7. How does IFRS differ from US GAAP in the accounting treatment for factoring receivables? While both focus on control and risk transfer, there may be nuanced differences in the application.
8. What are the potential benefits and drawbacks of factoring receivables? Benefits include immediate cash flow, drawbacks include fees and potential loss of control.
9. Where can I find more information on the latest accounting standards related to factoring? Consult the websites of the relevant standard-setting bodies (FASB, IASB) and professional accounting organizations.
Related Articles:
1. "Factoring Receivables: A Guide for Small Businesses": This article provides a simplified overview of factoring for small businesses, focusing on the practical aspects.
2. "The Impact of Factoring on Financial Ratios: A Case Study": This study analyzes the effect of factoring on various financial ratios, providing empirical evidence.
3. "Comparative Analysis of US GAAP and IFRS on Factoring Receivables": This article compares and contrasts the accounting treatment under different accounting standards.
4. "Recourse vs. Non-Recourse Factoring: A Detailed Comparison": This article provides an in-depth analysis of the two primary types of factoring.
5. "Disclosure Requirements for Factoring Arrangements under US GAAP": A focused article explaining the specific disclosure needs under US GAAP.
6. "Tax Implications of Factoring Receivables: A Jurisdictional Overview": This explores tax ramifications in various regions.
7. "Best Practices for Negotiating Factoring Agreements": This addresses the strategic aspects of negotiating favorable factoring terms.
8. "The Role of Factoring in Managing Working Capital": This article explores factoring's role in improving cash flow and working capital management.
9. "Evaluating the Financial Health of a Business Using Factoring Data": This article shows how to use factoring information in financial analysis.
| accounting treatment for factoring receivables: Accounting Principles Roger H. Hermanson, James Don Edwards, Michael W. Maher, 2018-02-16 Accounting Principles: A Business Perspective uses annual reports of real companies to illustrate many of the accounting concepts in use in business today. Gaining an understanding of accounting terminology and concepts, however, is not enough to ensure your success. You also need to be able to find information on the Internet, analyze various business situations, work effectively as a member of a team, and communicate your ideas clearly. Accounting Principles: A Business Perspective will give you an understanding of how to use accounting information to analyze business performance and make business decisions. The text takes a business perspective. We use the annual reports of real companies to illustrate many of the accounting concepts. You are familiar with many of the companies we use, such as The Limited, The Home Depot, and Coca-Cola Company. Gaining an understanding of accounting terminology and concepts, however, is not enough to ensure your success. You also need to be able to find information on the Internet, analyze various business situations, work effectively as a member of a team, and communicate your ideas clearly. This text was developed to help you develop these skills. |
| accounting treatment for factoring receivables: The Ultimate Accountants' Reference Steven M. Bragg, 2006-11-28 The Ultimate Accountants’ Reference Including GAAP, IRS & SEC Regulations, Leases, and More, Second Edition updates you on the latest accounting regulations for all aspects of the financial statements, accounting management reports, and management of the accounting department including best practices, control systems, and the fast close. This is the perfect daily answer book for the practicing accountant. |
| accounting treatment for factoring receivables: The Role of Factoring for Financing Small and Medium Enterprises Leora Klapper, Around the world, factoring is a growing source of external financing for corporations and small and medium-size enterprises (SMEs). What is unique about factoring is that the credit provided by a lender is explicitly linked to the value of a supplier ' s accounts receivable and not the supplier ' s overall creditworthiness. Therefore, factoring allows high-risk suppliers to transfer their credit risk to their high-quality buyers. Factoring may be particularly useful in countries with weak judicial enforcement and imperfect records of upholding seniority claims because receivables are sold, rather than collateralized, and factored receivables are not part of the estate of a bankrupt SME. Empirical tests find that factoring is larger in countries with greater economic development and growth and developed credit information bureaus. In addition, the author finds that creditor rights are not related to factoring ... -- Cover verso. |
| accounting treatment for factoring receivables: Accounting Reference Desktop Steven M. Bragg, 2002-10-16 Discusses issues not covered in other books, including bestpractices budgeting, closing the books, and control systems. Includes interest factor tables, sample forms for data entry,sample report formats for internal as well as externalreports. Features flowcharts and checklists for key control points inthe major accounting processes. |
| accounting treatment for factoring receivables: FRS 102 , 2015 |
| accounting treatment for factoring receivables: Financing Small and Medium-size Enterprises with Factoring Marie-Renée Bakker, Leora Klapper, Gregory F. Udell, 2004 |
| accounting treatment for factoring receivables: Wiley IFRS 2008 Barry J. Epstein, Eva K. Jermakowicz, 2008-03-28 The one indispensable guide to IFRS compliance Wiley IFRS 2008 is the comprehensive source for guidance in applying IFRS to complex, real-world fact situations, and is equally valuable for preparers, auditors, and users of financial reports. To facilitate the reader's understanding, the book includes both examples created to explain particular IFRS requirements and selections from actual published financial statements, which have been copiously provided throughout, illustrating all key concepts. Barry J. Epstein (Chicago, IL) is a partner with Russell Novak & Company, LLP, where he specializes in technical and litigation consultation on U.S. and international accounting and auditing matters and corporate governance. Eva K. Jermakowicz, PhD, CPA (Nashville, TN) is a university professor and a leading consultant to international organizations and businesses. She is a frequent speaker at international venues and has 25 years of teaching experience. |
| accounting treatment for factoring receivables: Principles of Accounting Volume 1 - Financial Accounting Mitchell Franklin, Patty Graybeal, Dixon Cooper, 2019-04-11 The text and images in this book are in grayscale. A hardback color version is available. Search for ISBN 9781680922929. Principles of Accounting is designed to meet the scope and sequence requirements of a two-semester accounting course that covers the fundamentals of financial and managerial accounting. This book is specifically designed to appeal to both accounting and non-accounting majors, exposing students to the core concepts of accounting in familiar ways to build a strong foundation that can be applied across business fields. Each chapter opens with a relatable real-life scenario for today's college student. Thoughtfully designed examples are presented throughout each chapter, allowing students to build on emerging accounting knowledge. Concepts are further reinforced through applicable connections to more detailed business processes. Students are immersed in the why as well as the how aspects of accounting in order to reinforce concepts and promote comprehension over rote memorization. |
| accounting treatment for factoring receivables: GAAP Guidebook Steven M Bragg, 2020-11-08 Generally Accepted Accounting Principles (GAAP) are used as the basis for financial reporting. The original GAAP documents span thousands of pages, and so are difficult to research. The GAAP Guidebook solves this problem by condensing GAAP into a single volume. This book describes the key elements of each topic, how accounting information is disclosed, and where to look in the FASB Codification source documents for additional information. The text contains hundreds of practical examples that show how to apply GAAP to real-world situations, as well as sample journal entries and usage tips. In short, the GAAP Guidebook serves as a handy reference for accountants who need quick answers to difficult problems. |
| accounting treatment for factoring receivables: The Ultimate Accountants' Reference Steven M. Bragg, 2010-01-28 A wide-ranging source of information for the practicing accountant, The Ultimate Accountants' Reference, Third Edition covers accounting regulations for all aspects of financial statements, accounting management reports, and management of the accounting department, including best practices, control systems, and the fast close. It also addresses financing options, pension plans, and taxation options. The perfect daily answer book, accountants and accounting managers will turn to The Ultimate Accountants’ Reference, Third Edition time and again for answers to the largest possible number of accounting issues that are likely to arise. |
| accounting treatment for factoring receivables: Accounts Receivable Financing. -- Raymond Joseph 1908- Saulnier, 2021-09-09 This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant. |
| accounting treatment for factoring receivables: Intermediate Accounting For Dummies Maire Loughran, 2012-04-24 The easy way to master an intermediate accounting course Intermediate accounting courses are required for students seeking bachelor's degrees in accounting and often for degrees in finance, business administration, and management. Intermediate Accounting For Dummies provides you with a deeper and broader level of accounting theory, serving as an excellent course supplement and study guide to help you master the concepts of this challenging program. With easy-to-understand explanations and realworld examples, Intermediate Accounting For Dummies covers all the topics you'll encounter in an intermediate accounting course: the conceptual framework of Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), financial ratio analysis, equity accounting, investment strategies, financial statement preparation, and more Tracks to a typical intermediate accounting curriculum Expert information and real-world examples Other titles from Loughran: Financial Accounting For Dummies and Auditing For Dummies With the help of Intermediate Accounting For Dummies, you'll discover the fast and easy way to take the confusion out of the complex theories and methods associated with a typical intermediate accounting course. |
| accounting treatment for factoring receivables: Accounting Principles for Non-Executive Directors Peter Holgate, Elizabeth Buckley, 2009-03-05 A clear, jargon-free explanation of the key elements behind a listed company's annual report and accounts. |
| accounting treatment for factoring receivables: Wiley CPA Exam Review 2011, Financial Accounting and Reporting Patrick R. Delaney, O. Ray Whittington, 2010-10-05 This comprehensive four-volume set reviews all four parts of the CPA exam. With more than 3,800 multiple-choice questions over all four volumes, these guides provide everything a person needs to master the material. |
| accounting treatment for factoring receivables: Optimizing Company Cash Michèle Allman-Ward, A. Peter Allman-Ward, 2018-02-21 Optimizing Company Cash provides a comprehensive guide to all elements of cash management in a business including: Inflows Outflows Cash conversion cycles Short-term borrowing and investing International business How to structure a corporate treasury function In over 200 pages, the Guide explains how CPAs and financial managers can manage their company's short-term resources to sustain ongoing activities, mobilize funds and optimize liquidity. It also provides diagrams of work flows, step-by-step checklists, templates, and treasury tips for CPAs and finance managers who are responsible for making the most of working capital and short-term resources. |
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| accounting treatment for factoring receivables: Wiley GAAP 2020 Joanne M. Flood, 2020-02-05 The most comprehensive guide to FASB Codifications, updated with the latest pronouncements Wiley GAAP 2020 is the essential resource for US GAAP implementation. Covering all codifications by the Financial Accounting Standards Board (FASB) - including the latest updates - this book provides clear explanations and practical examples for real-world application of these dynamic guidelines. Each chapter includes relevant sources of GAAP and expert guidance on interpretation, terminology, relevant concepts, and applicable rules, while in-depth discussion on the issues surrounding specific pronouncements offers informative perspective for a variety of scenarios. Staying up-to-date with constantly-evolving guidelines is a challenge. Wiley GAAP 2020 provides the guidance, insight, and perspective accounting professionals need to ensure accurate and up-to-date GAAP implementation. |
| accounting treatment for factoring receivables: Intermediate Accounting, Volume 1 Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy, 2019-01-09 Intermediate Accounting, 12th Edition, Volume 1, continues to be the number one intermediate accounting resource in the Canadian market. Viewed as the most reliable resource by accounting students, faculty, and professionals, this course helps students understand, prepare, and use financial information by linking education with the real-world accounting environment. This new edition now incorporates new data analytics content and up-to-date coverage of leases and revenue recognition. |
| accounting treatment for factoring receivables: Manual of Accounting: Financial Instruments 2012 PwC, 2011-12-31 Accounting for financial instruments is one of the most complex and taxing areas in accounting today that needs to be understood by all practicing accountants. The International Financial Reporting Standards that govern this area of accounting are often difficult to understand and interpret. PwC’s Manual of Accounting - Financial Instruments 2012 is a thoroughly comprehensive, clearly explained and informative guide to these standards. It contains practical worked examples and extracts from company financial statements that help to illustrate the explanations. Key changes from previous edition include updated guidance on: IFRS 9 - including aspects on liabilities issued in November 2010; Consequential amendments of IFRS 9; IASB amendment to IFRS 7, ’Financial instruments: Presentation’, on derecognition; Annual improvements 2010; IFRIC agenda decisions; New extracts and examples. This book draws on the combined expertise and experience of financial instrument specialists in PWC’s Global Accounting Consulting Services team. It will be of particular interest to preparers and users of IFRS financial statements and others who require a detailed knowledge of financial instruments accounting. Analysts, academics and students will also find it a valuable reference tool. |
| accounting treatment for factoring receivables: Financial Instruments International Accounting Standards Committee, 2000 |
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| accounting treatment for factoring receivables: Factoring Partho H. Chakraborty and Arvind Sonmale, 2017-01-01 Factoring as means of finance is very ancient. There are also many books written about it. The factoring we see today can be considered the classical form of factoring or the vanilla type. Customers these days are very discerning and want more than the vanilla type of factoring. Since companies and banks offering Factoring struggle to go beyond this, an endeavour to solve the problem was the basis of writing this book. This book, divided into 3 parts, goes beyond the classical type of Factoring with a lot of examples and some live cases. It has pictures that are unique as it gives information on and traces our history on ancient monetary system. It is a must read for everyone and serves a reference point for Factoring. |
| accounting treatment for factoring receivables: Creditor Treatment in Corporate Insolvency Law Kayode Akintola, 2020-11-27 The significant role of credit in obtaining corporate capital means that credit and the treatment of creditors’ interests raises distinctive issues in the event of company insolvency. In this book, Kayode Akintola addresses these issues, providing an exceptional in-depth analysis of the principles, policy and practice of creditor treatment in corporate insolvency law. |
| accounting treatment for factoring receivables: IFRS Manual of Accounting 2009 , 2008 International Financial Reporting Standards (IFRSs) are being increasingly used by companies throughout the world. All entities listed in the EU have been required to issue financial statements under IFRS since 2005, and more and more other countries are making the change to IFRS including the US and Canada. ... The Manual is packed full of clear, practical guidance on how to prepare financial statements in accordance with IFRS. It includes hundreds of practical worked examples and extracts from company reports as well as model IFRS financial statements that help to illustrate the explanations and show exactly how even the most complex calculations and disclosures should be made.--Cover. |
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| accounting treatment for factoring receivables: Financial Accounting, Print and Interactive E-Text John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie, Andreas Hellmann, Jodie Maxfield, 2023-09-15 A benchmark Financial Accounting text over the past 30 years, Hoggett's Financial Accounting has been refreshed in this twelfth edition. A must-have for students who want to succeed in their unit and leave with a rich foundation of technical knowledge for their future study and accounting career, the text focuses on accounting from the perspective of a financial statement preparer. With two versions being published, Hoggett's Financial Accounting can be used for either the typical one-semester course, or Hoggett's Accounting (with six additional introductory management accounting chapters) can extend to two-semesters. The eBook edition of Financial Accounting, 12th Edition features a range of instructional media content designed to provide students with an interactive and engaging learning experience. This unique resource can also form the basis of a blended learning solution for lecturers. |
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| accounting treatment for factoring receivables: Financial Accounting and Reporting Barry Elliott, Jamie Elliott, 2011 Financial Accounting and Reporting is the most up to date text on the market. Now fully updated in its fourteenth edition, it includes extensive coverage of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). This market-leading text offers students a clear, well-structured and comprehensive treatment of the subject. Supported by illustrations and exercises, the book provides a strong balance of theoretical and conceptual coverage. Students using this book will gain the knowledge and skills to help them apply current standards, and critically appraise the underlying concepts and financial reporting methods. |
| accounting treatment for factoring receivables: Accounting Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, 2010-12-01 With this fourth edition, accountants will acquire a practical set of tools and the confidence they need to use them effectively in making business decisions. It better reflects a more conceptual and decision-making approach to the material. The authors follow a macro- to micro- strategy by starting with a discussion of real financial statements first, rather than starting with the Accounting Cycle. The objective is to establish how a financial statement communicates the financing, investing, and operating activities of a business to users of accounting information. This motivates accountants by grounding the discussion in the real world, showing them the relevance of the topics covered to their careers. |
| accounting treatment for factoring receivables: Intermediate Accounting J. David Spiceland, James Sepe, Lawrence A. Tomassini, 2005-11 Adopters and reviewers praise Intermediate Accounting, 4e, by Spiceland/Sepe/Tomassini for its superior readability, strong supplements package/learning system, good EOC, real-world flavor, consistent quality; and high student engagement. SST 4e will gain support in both traditional and progressive accounting departments, especially those looking for a more concise, decision-making text that reinforces challenging concepts. The authors have created a flexible text with a student friendly writing style that focuses on explaining not only how to apply a procedure, but why it's applied.SST 4e is built around a Learning System designed to prepare students for the new CPA exam and the business world, by emphasizing decision making. Acknowledging the diversity of students and their learning styles, the authors have created a clear text and varied supplemental materials to aid the success of every student. SST 4e also provides a flexible and consistent supplemental package for instructors. |
| accounting treatment for factoring receivables: Financial Accounting and Reporting Barry Elliott, Jamie Elliott, 2008 Revised annually, Financial Accounting & Reporting is the most up-to-date text on the market. Now fully updated in its 12th edition, it includes extensive coverage of International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs). This market-leading text offers students a clear, well-structured and comprehensive treatment of the subject. Supported by illustrations and exercises, the book provides a strong balance of theoretical and conceptual coverage. Students using this book will gain the knowledge and skills to help them apply current standards, and critically appraise the underlying concepts and financial reporting methods. |
| accounting treatment for factoring receivables: M&A Disputes Heiko Daniel Ziehms, 2023-10-25 M&A disputes, which range from breach of warranty and fraud claims to disagreements over price adjustments, earn-outs, material adverse change clauses and many others – are more common than many participants in M&A transactions may realise. They can take years to resolve and cost many millions of pounds, euros, or dollars. A dispute can adversely affect the post-transaction environment and hence the prospects of a successful acquisition or, at worst, frustrate a deal entirely. It is therefore vital to understand how such disputes happen, how they can be resolved, and how to avoid them, or at least minimise the potential for an M&A dispute. This indispensable practice guide provides not only a comprehensive discussion of the ‘mechanics’ of M&A transactions and purchase price adjustments but also a deeply informed analysis of what goes wrong in deals that leads to disputes and how to avoid (or resolve) such eventualities. Originally intended as a second edition of the author’s well-known M&A Disputes and Completion Mechanisms, published in 2018, this is in fact a new book, drawing on a new set of experiences and observations taken from a period where the scope for M&A disputes has intensified. Framed as an in-depth discussion of typical questions that confront those who assess financial and accounting issues in M&A disputes, including the question of damages, the analysis expertly investigates the pitfalls that can arise in such components of the process as the following: the completion mechanism, including the rationale and basis of measurement of individual purchase price adjustments and the locked box; the role of accounting information in presenting, or misrepresenting, the underlying economic reality of a business and in informing a valuation; valuation principles, standards of value, and valuation methods used for M&A disputes; valuation matters specific to M&A disputes, including the question of value vs. price and the choice of counterfactuals; material adverse change clauses; and ‘red flags’ for fraud. A concluding chapter distils ‘lessons learned’ into a short, practical commentary drawing on the author’s extensive experience of M&A- and related disputes, with recommendations that plot a clear path to avoidance of disputes. With its sound understanding of the completion mechanism, including an extensive discussion of measurement of individual purchase price adjustments, the locked box, and how to identify fraud, this practical and up-to-date guide, grounded in corporate finance theory, will be a valuable resource to all those who work on M&A transactions, whether as principal, adviser, insurer, funder, independent expert, judge, or arbitrator.. |
| accounting treatment for factoring receivables: Contemporary Financial Intermediation Stuart I. Greenbaum, Anjan V. Thakor, Arnoud W. A. Boot, 2019-05-14 Contemporary Financial Intermediation, 4th Edition by Greenbaum, Thakor, and Boot continues to offer a distinctive approach to the study of financial markets and institutions by presenting an integrated portrait that puts information and economic reasoning at the core. Instead of primarily naming and describing markets, regulations, and institutions as is common, Contemporary Financial Intermediation explores the subtlety, plasticity and fragility of financial institutions and credit markets. In this new edition every chapter has been updated and pedagogical supplements have been enhanced. For the financial sector, the best preprofessional training explains the reasons why markets, institutions, and regulators evolve they do, why we suffer recurring financial crises occur and how we typically react to them. Our textbook demands more in terms of quantitative skills and analysis, but its ability to teach about the forces shaping the financial world is unmatched. - Updates and expands a legacy title in a valuable field - Holds a prominent position in a growing portfolio of finance textbooks - Teaches tactics on how to recognize and forecast fluctuations in financial markets |
| accounting treatment for factoring receivables: Financial Accounting Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, 2010-10-25 This successful book continues to provide accountants with an understanding of the fundamental concepts necessary to use accounting effectively. The sixth edition offers new discussions on IFRS, including new codification numbers, examples of IFRS financial statements, and additional exercises. A look at more recent frauds such as the Bernie Madoff scandal have been added. Enhanced discussions of ethics and international accounting are presented. The coverage of non-cash items and their impact on decision making has been expanded. In addition, comprehensive case studies and problems help accountants tie the material together. |
| accounting treatment for factoring receivables: Logistics and Supply Chain Innovation Henk Zijm, Matthias Klumpp, Uwe Clausen, Michael ten Hompel, 2015-09-01 This contributed volume presents state-of-the-art advances in logistics theory in various fields as well as case studies. The book reports on a number of recently conducted studies in the Dinalog and the EffizienzCluster LogistikRuhr, thus bridging the gap between different perspectives of theoretical and applied research. A selection of theoretical topics, practical examples, case studies and project reports is presented in this volume. The editors carefully selected contributions from a wide variety of projects, which were carried out in both the Dinalog cluster and the Effizienzcluster LogistikRuhr. The contributions are grouped in five main sections, each representing key domains in the evolution of logistics and supply chain management: sustainability, urban logistics, value chain management, IT-based innovation, knowledge management. This book is intended for both researchers and practitioners in the field of logistics and supply chain management, to serve as an important source of information for further research as well as to stimulate further innovation. |
| accounting treatment for factoring receivables: , |
| accounting treatment for factoring receivables: Manual of Accounting - New UK GAAP , 2013-01-01 Manual of Accounting - New UK GAAP addresses the requirements of FRS 102 which is the new UK GAAP and will be adopted by all companies not wanting to move to IFRS and who are too large to implement the Financial Reporting Standard for Smaller Entities which in 2015 can be applied by companies with a turnover of .6,500,000 per year and a balance sheet of .3,260,000 per year. |
| accounting treatment for factoring receivables: Financing Trade and International Supply Chains Mr Alexander R Malaket, 2014-02-28 The vast majority of international trade is supported by some form of trade financing: a specialized, sometimes complex form of financing that is poorly understood even by bankers and seasoned finance and treasury experts. Financing Trade and International Supply Chains takes the mystery out of trade and supply chain finance, providing a practical, straightforward overview of a discipline that is fundamental to the successful conduct of trade: trade that contributes to the creation of economic value, poverty reduction and international development, while increasing prosperity across the globe. The book suggests that every trade or supply chain finance solution, no matter how elaborate, addresses some combination of four elements: facilitation of secure and timely payment, effective mitigation of risk, provision of financing and liquidity, and facilitation of transactional and financial information flow. The book includes observations on the effective use of traditional mechanisms such as Documentary Letters of Credit, as well as an overview of emerging supply chain finance solutions and programs, critical to the financing of strategic suppliers and other members of complex supply chain ecosystems. The important role of export credit agencies and international financial institutions is explored, and innovations such as the Bank Payment Obligation are addressed in detail. Financing Trade and International Supply Chains is a valuable resource for practitioners, business executives, entrepreneurs and others involved in international commerce and trade. This book balances concept with practical insight, and can help protect the financial interests of companies pursuing opportunity in international markets. |
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Bridging the gap between CFO and accounting services with our strategic suite of CFO-level services intended to turn major ambitions into manageable action plans. Customized …
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They are easy to use, seamless tax preparation and always available when you need documents for things like closing on a home. I appreciate their attention to detail and their help when I …
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From Business: We focus on providing high-quality and affordable outsourced accounting and tax reporting services to small and mid-sized not-for-profit organizations. We would… 2. …
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We are accounting and bookkeeping experts that specialize in providing financial reconciliations, monthly financial statement creation, and transaction processing for small to medium-sized …
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Work with company leadership to develop, establish, and manage materials management, procurement and accounting procedures necessary for effective operations. Job costing …
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Rhea & Company provides uniquely personalized, professional accounting and tax services to small business and individual clients. The virtual practice is based in Carmel, Indiana and is …
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