Factoring and Goodwill: Difference between pages

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The sale or transfer by a supplier of legal title to accounts receivable (invoices).
1. ''Intangible assets - financial reporting.''


The supplier sells or transfers title to the receivables to a third party known as a factor.
Goodwill is an intangible asset representing the additional premium - in excess of the value of net assets - paid to acquire control of a business.  


The arrangement can be either with or without recourse.  
Also known as positive goodwill.




Factoring is often a convenient - but relatively expensive - form of finance for weaker corporate credits.
2. ''Financial reporting - consolidated accounts.''


The supplier sells its invoices, at a discount, to the factor. The factor then becomes responsible for collecting the debt.  
The excess of the total value of the whole business, above the net value of its individual assets and liabilities.


A factoring agreement between the factor and a client sets out the terms on which a factoring arrangement is made.


Relevant accounting standards include Sections 18, 19 and 27 of FRS 102.


As noted above, factoring arrangements can be with or without recourse.


Recourse factoring allows the factor to recover from the supplier/borrower any losses caused by bad debts.
3. ''Intangible assets - reputational risk management.''
 
The positive reputation of a business.




== See also ==
== See also ==
* [[Acquisition accounting]]
* [[Consolidated group accounts]]
* [[Financial reporting]]
* [[FRS 102]]
* [[Goodwill on consolidation]]
* [[Impairment]]
* [[Intangible assets]]
* [[Negative goodwill]]
* [[Net assets]]
* [[Reputational risk]]
* [[Research & development]]


* [[Factors]]
[[Category:Accounting,_tax_and_regulation]]
* [[Confidential factoring]]
[[Category:Corporate_finance]]
* [[Domestic factoring]]
* [[Export factoring]]
* [[Import factoring]]
* [[Internal factoring]]
* [[International factoring]]
* [[Invoice discounting]]
* [[Recourse]]
* [[Securitisation]]

Revision as of 16:15, 9 June 2021

1. Intangible assets - financial reporting.

Goodwill is an intangible asset representing the additional premium - in excess of the value of net assets - paid to acquire control of a business.

Also known as positive goodwill.


2. Financial reporting - consolidated accounts.

The excess of the total value of the whole business, above the net value of its individual assets and liabilities.


Relevant accounting standards include Sections 18, 19 and 27 of FRS 102.


3. Intangible assets - reputational risk management.

The positive reputation of a business.


See also