Just don’t get the securitization part: if the receivables have been securitized for 2million, i thought the cash amount of 2 milionl would be received *immediately*, which means it can be recognized immediately on financial statements. Am I wrong?
Thanks for any clarification!
receivables could be securitised with out SPV/SPE , both cash and debt increases but receivables days look better . SPV is done to make B/S look lighter and bankcruptcy remote , which helps to get higher credit rating and thereby lower cost of borrowing .
Why would debt increase? Cash increases, receivables decrease, and there’s likely a loss that appears on the income statement and flows to equity through retained earnings.
I still dont get it in terms of this particular question. Any other way to explain by someone else?
The question is asking for cash collected from customers. cash received from SPV upon securitization should not count towards cash collected from customers is the only reason I can think that made sense.
Thanks CMLCML, I see what you mean,and it seems to make sense to me too. So the 2 million cash, whether collected or not, is excluded from the cash collected *from customers*.
But just for curiosity, when receivables are securitied, can the cash received from SPV be IMMEDIATELY reported as ‘revenue’ in IS? I say yes, but would like a confirmation just in case I’m wrong 
Revenue would have already been recognized when the accounts receivable was initially recorded.
Go read up on the differences between accrual and cash accounting for more insight young man.