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Chapter 6 - Assets - ARPledgeAssign

The document outlines two methods of receivable financing: Pledge and Assignment. In a Pledge, receivables serve as collateral for borrowing without derecognition, while in an Assignment, receivables are specifically identified and categorized, with payment receipts required to be applied to the borrowing. Both methods do not recognize any gain or loss from the transactions.

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John Rustin Villela
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24 views1 page

Chapter 6 - Assets - ARPledgeAssign

The document outlines two methods of receivable financing: Pledge and Assignment. In a Pledge, receivables serve as collateral for borrowing without derecognition, while in an Assignment, receivables are specifically identified and categorized, with payment receipts required to be applied to the borrowing. Both methods do not recognize any gain or loss from the transactions.

Uploaded by

John Rustin Villela
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Receivable Financing – Pledge Multiply: % to be lent

XX
& Assignment
Gross Proceeds
RF:
XX
(1) Receivables as Security:
Less: Service Charge
- Receivables serve as mere
XX
collateral for the entity’s borrowing
of funds. Net proceeds
- Examples: Pledge or Assignment XX
(2) Selling of Receivables:
- Receivables are sold or transferred
to other entities.
- Examples: Factoring or Discounting

Pledge of Receivables

a. Pledged receivables are not


derecognized
b. Borrowed Funds are separately
recognized as Liability
c. No Gain or Loss is recognized
d. Interest Income if any from
receivables, Interest income if any
from borrowed funds.
e. Payment is still received by the
Pledging Entity (Pledgor)
f. Amount received are not required to
be applied to the borrowed funds.

Assignment of Receivables

a. Assigned receivables are specifically


identified.
b. Assigned receivables are not
derecognized, however the assigned
receivables are classified into separate
receivables account (A/R-Assigned)
c. The receipts of payment of creditors:
i. If non-notification basis –
Assigning Entity
ii. If notification basis – Lender
d. The amount of Receipt of payments on
the assigned receivables are required
to be applied to the amount of
borrowing.
e. No gain or Loss recognized

Amount to be received in Assignment

Total amount of assigned receivables


XX

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