Bad debt written off?

Question

Our company directors does not agree with some of the bad debts written off into income statement, they need the supports from the requirement of accounting standard, Anyone who know which accounting standard can prove it?

Answer 1

I agree with the above answer, I think you'll find this is a commercial decision.

However,  there is a resonsibility on directors to ensure that statements are 'true and fair' and you will have to convince the companys auditors that there is a reasonable chance of collecting the debt  (i.e. count it as an asset) or they can refuse to sign (or qualify) the accounts.

Answer 2

There is no "accounting standard" telling you what debts to write off. It's a commercial judgment.

The company just has to decide whether, in its opinion, the money will be received. If not ... write off in the accounts as a  bad debt.

Answer 3

Some readers read this as they are in my situation

I only learnt last week that, because the only home I ever had on mortgage was bought just a few weeks before the '80s property prices boom crashed - we bought @ £55k - but I worked for 3 companies on the run who went bust

8 months later - after repo - the house sold for only £48k - @ 12% loss

That is STILL on my record - thru no fault of mine - do you banker bozos think I caused the crash ???

& that is why no UK bank will give me a chequebook or a debit card - even tho I'm always in the black

& will sign saying PLEASE don't let me go O/D

I only want a debit card to know that I can only spend what I have, as that is the unbeatable financial acumen of Man's Maker's Manual: God's Word - the Bible

Are the UK banks thus being unbelievably archaic?

Hello all you ostriches, heads stubbornly buried in the sand !!

Do you banks/building societies show yourselves as fully deserving the global financial collapse prophesied in Rvelation 18 - by arrogantly & falsely claiming that you know better than the Almighty Creator?

Pride comes before the 'Fall of Babylon' - (Rev. 18)

Answer 4

Commercial decision.

If there is a dispute amongst the Directors, with Finance Director on one side and MD on the other, vote on it - and record who voted what (since if the Company goes bust as a result, the Directors could be prosecuted/disqualified for Trading Whilst Insolvent)

The other choice is to take it to the auditors & give them the final say.