When receivables are factored without recourse, the transferor generally:

Question

Quizplus · Accepted Answer

When receivables are factored without recourse, the transferor (the entity selling the receivables) recognizes an immediate loss or expense for the cost of the transfer and removes the receivables from its books. This is because the risk of uncollectible accounts is transferred to the factor, and the transferor no longer has any claim or control over the receivables.

When Receivables Are Factored Without Recourse, the Transferor Generally