Section 2: 30–40%2B
Trade Receivables
Receivables represent amounts owed by customers and are reported at net realizable value. The exam tests the allowance method in two forms (income statement vs. balance sheet approach), factoring receivables, the CECL model, and assignment vs. pledging of receivables.
What AICPA Wants You to Know
- 1Compute bad debt expense and the allowance using the income statement and balance sheet approaches
- 2Apply the CECL model (ASC 326) for estimating expected credit losses
- 3Distinguish factoring without recourse from factoring with recourse
- 4Explain assignment and pledging of receivables and proper accounting treatment
- 5Calculate net realizable value of accounts receivable