USA Revenue Recognition for Factoring Companies


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Jun 30, 2017
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A factoring companies buys accounts receivables from other companies at a discount.

So an example is -

$100 invoice bought at a 3% discount = $97

Does the journal entry recognize the $3 as revenue or deferred revenue?

CR Cash 97
CR Deferred Revenue 3
DR A/R 100

in which case the revenue is recognized at payment of the invoice

or is it

CR Cash 97
CR Revenue 3
DR A/R 100

Thanks!
 
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