VZ Company sold accounts receivable without recourse for P5,300,000.

The company received

P5,000,000 cash

immediately from the factor.

The remaining P300,000 will be received once the factor verifies that none of the accounts is in dispute.

The accounts receivable had a face amount of P6,000,000. The company had previously established an
allowance for

uncollectible accounts of P250,000 in connection with such accounts.

1. What amount of loss on factoring should be recognized?

Sales price 5,300,000

Carrying amount of accounts receivable ( 6.000,000- 250,000) 5,750,000

Loss on factoring (450,000)