Eliminating Intercompany Notes Receivable  | Discounting Notes Receivable | Advanced Accounting CPA
Channel: Farhat Lectures. The # 1 CPA & Accounting Courses
Date: 2019-07-08

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Occasionally a company may issue a note to an affiliated company that may then discount
the note with an outside party, or a company holding a note receivable from an outside
party may discount the note with an affiliated company. The affiliate acquiring the note
may discount the note again with an outside party. From a consolidation point of view, a
receivable held by one of the affiliated companies should be reported in the consolidated
balance sheet only if the note is due from an outside party. A contingent liability should be
disclosed if a note has been discounted with an outside party and the endorsement was with
recourse.
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