provision or bad debt

yvesyves Feels At HomeRegistered Posts: 28
Hi can anyone tell me why a provision for a bad debt would have been made by an accountant

when the company owing the debt is no longer in business and the debt is over three years old rather than just writing off as a bad debt



  • BHBBHB Settling In Nicely Registered Posts: 23

    When did the company owing the debt cease trading. Is there any likely of any debtors being paid out of their assets?

  • yvesyves Feels At Home Registered Posts: 28
    The company ceased trading a least a couple of years ago had letters from solicitors on some and others are foreign truck drivers who have dissapeared unable to get in touch with them to chase the money but all the debts are originally 2004/2005

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Yves, I can't think of a reason where a provision would have been made instead of a write-off in this case. From what you've said there's very little chance of it being recovered so a write-off seems necessary.
  • yvesyves Feels At Home Registered Posts: 28
    thanks faerie for replying I couldnt see a reason thought there may have been a reason for it in the year end accounts but I couldnt see how it made any difference to the final accounts for the year apart from a provision being temporary and a write off being final

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