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Case 09-6 social welfare, Inc. Tommy Toe, the controller of UpBeat, Inc., a successful company in Greenville, South Carolina, was whistling. Sales in the last quarter easily exceeded bud needed amounts, and the order backlog indicated that the next quarter would be explicit better. All of a sudden, Tommy frowned. When he reviewed the monthly reporting jam and cash flow projections, he noniced that the debt-to-equity ratio had deteriorated. This poses a problem under UpBeats debt compact cars. In addition, at present liquidity is tight and the company is having hassle memory current on taxes and on payments to suppliers and employees. Tommy immediately called UpBeats local bank. The bank manager recommended that UpBeat trade in murder some of its accounts receivable to increase its liquidity and better its debt covenant ratios. UpBeat agreed to sell the bank $50 billion of accounts receivable at 90 percent of type value. The sideline provisions are included in the exch ange contract: Transfer Provision 1 The bank has to perplex permit from UpBeat if it decides to sell/pledge the accounts receivable, which UpBeat would not immoderately withhold. Transfer Provision 2 UpBeat has the choice to repurchase the accounts receivable at a fixed footing if it obtains capable liquidity from new investors or other sources. Tommy knows that jural closing off is often an issue in barter accounting. As a result, he was not surprised when his attendant asked for a legitimate opinion. The legal letter Tommy obtained included a would opinion stating that the changered assets would be beyond the r to each matchless of the powers of a bankruptcy trustee. Tommys auditor evaluated the legal letter and found it adequate to support legal isolation of the accounts receivable delegatered. Tommy has requested your assistance in find out whether the transfer provisions preclude sale accounting. Required: For each of the transfer provisions included i n the agreement, determine whether the provi! sion...If you penury to get a full essay, order it on our website: BestEssayCheap.com

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