BÀI GIẢNG kế TOÁN QUỐC tế chapter 12 irrecoverable debts and allowances

Chapter 12IRRECOVERABLE DEBTS AND ALLOWANCES... Irrecoverable debts and receivables allowances 2.. Accounting for irrecoverable debts and receivables allowances... Irrecoverable debt

Chapter 12

IRRECOVERABLE DEBTS AND

ALLOWANCES

Learning Objectives

1 Irrecoverable debts and receivables

allowances

2 Accounting for irrecoverable debts and

receivables allowances

Irrecoverable debts and receivables

allowances

Irrecoverable debts

If definitely irrecoverable, the

prudence concept (IAS 1) dictates

that it should be written off to the

income statement as an

irrecoverable debt

Receivables allowances

If uncertainty exists as to the recoverability of the debt, prudence dictates that an allowance should beset up This

is offset against the receivables balance on the statement of financial position

• A receivable should only be classed as an asset if it is recoverable

•Allowances can either be specific, against a particular receivable,

Accounting for irrecoverable debts

and receivables allowances

General allowances

When calculating the general allowance to be made, the

following order applies.

Note Only the movement in the general allowance needs to be accounted for

Accounting for irrecoverable debts and

receivables allowances

If a reduction in the receivables allowance is required, then:

Accounting for irrecoverable debts and

receivables allowances

Subsequent recovery of debts

If an irrecoverable debt is recovered, having previously been written off, then:

If the recovery is in a later accounting period, then the

credit is to irrecoverable debts recovered