Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 362: 8

Answer

Basic problems encountered during valuation of receivables are: 1. Probability of future collection of receivables 2. Determination of face value of receivables 3. Length of time receivable will remain outstanding.

Work Step by Step

Determination of the face value of the receivable is a function of trade discount is a function of the cash discount, trade discount, and other allowances such as sales returns and allowances.
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