FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except :
A) The assets transferred have been isolated from the selling firm.
B) The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor.
C) The selling firm does not maintain effective control over the assets transferred through (a) an agreement that both entitles and obligates it to repurchase the assets or (b) the ability to unilaterally cause the transferee to return specific assets.
D) A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy.

Question

Quizplus · Accepted Answer

FASB has set forth three conditions for recognizing transfers of receivables as sales: isolation of assets, obtaining the right to pledge or exchange the transferred assets, and surrendering control of the assets. The fourth condition stated in option D, which allows a creditor of the selling firm to access the receivables in case of the seller's bankruptcy, is not among the conditions for recognizing transfers of receivables as sales.

FASB Has Set Forth All of the Following Conditions for Recognizing