Which of the following conditions must be met by a company (the transferor) to record the transfer of accounts receivable for which it surrenders control to another company as a sale?

A) The transferred assets have been isolated from the transferor (i.e., put beyond the reach of the transferor) .
B) The transferee obtains the right to exchange (e.g., sell) the transferred assets.
C) The transferor does not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity.
D) All of these conditions must be met.

Question

Zahraa Badin · Accepted Answer

Final Answer : D, Explanation :  All of these conditions must be met for a company to record the transfer of accounts receivable for which it surrenders control to another company as a sale. The transferred assets must be isolated from the transferor, the transferee must obtain the right to exchange the transferred assets, and the transferor must not maintain effective control over the transferred assets through an agreement that entitles and obligates the transferor to repurchase the transferred assets before their maturity.

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