FSA: securitized AR

if AR has been securitized, is it still listed as AR on b/s, or listed under other item? Thanks.

A company sells AR to a SPE. The SPE buys the AR and then provides cash back to the company for the asset. This is your typical scenario. Think about your accounting formula, if you sell an asset, in this case AR, you are converting that asset into cash so you can’t double count it. Cash up AR down. So your current ratio stays the same. The receivables will entirely come off of the BS under normal circumstances. Here’s where it gets tricky. There are other scenarios where the SPE could be classified as a VIE. If that happens, look up the criteria, then you must consolidate the VIE. Also, if the AR sold has recourse then you must account for that special treatment as well.

thanks! based on the question i’ve seen, once AP is securitized, it increase both asset and liability the same amount. if when AR is securitized, it increase cash and reduce AR, under which item it increase liability? Thanks. Chuckrox8 Wrote: ------------------------------------------------------- > A company sells AR to a SPE. The SPE buys the AR > and then provides cash back to the company for the > asset. This is your typical scenario. Think > about your accounting formula, if you sell an > asset, in this case AR, you are converting that > asset into cash so you can’t double count it. > Cash up AR down. So your current ratio stays the > same. The receivables will entirely come off of > the BS under normal circumstances. > > > Here’s where it gets tricky. There are other > scenarios where the SPE could be classified as a > VIE. If that happens, look up the criteria, then > you must consolidate the VIE. Also, if the AR > sold has recourse then you must account for that > special treatment as well.