A note receivable that is sold (i.e. discounted) to obtain early cash must be:

Question

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When a note receivable is sold (discounted), it is treated as either a sale or a loan depending on whether or not the seller retains any liability if the note is not paid. If the seller retains liability, it is treated as a loan, and if not, it is treated as a sale. The note is removed from the seller's accounts, and any gain or loss on the transaction is recognized. It is not reported as an unusual loss if it is dishonored, and it is not disclosed as a contingent liability if it is discounted without recourse, as the seller has no further liability.

A Note Receivable That Is Sold (I