In some situations, general provision for doubtful debt is offered for accoridng for the age with the outstanding debt. Even so, General provision for doubtful receivable is no longer permitted subsequent for the implementation of IAS 39.
“A financial asset or a group of financial assets is impaired and impairment losses are incurred if, & only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.”
As such, impairment loss really should be recognized when, subsequent for the initial recognition with the receivable, an event has occurred which causes the receivable to become impaired. General provision offered in accordance with age with the outstanding is no longer permitted. The financial asset really should be impaired if, and only if, there is certainly objective proof of impairment.
Provision for doubtful debts or at some point otherwise identified as allowance of doubtful debt, will be amounts owned by potential customers (that is definitely, debtors) existing at balance date which, even though not positively recognized as bad, are viewed as to become doubtful of collection. To become constant with accrual accounting, debts that happen to be doubtful at balance date should be recognized as an expense within the existing accounting period.
Provision for doubtful debts or at some point otherwise identified as allowance of doubtful debt, will be amounts owned by potential customers (that is definitely, debtors) existing at balance date which, even though not positively recognized as bad, are viewed as to become doubtful of collection. To become constant with accrual accounting, debts that happen to be doubtful at balance date should be recognized as an expense within the existing accounting period.
