12-25-2009, 03:07 PM
Mohsin's explanation is good and can be expanded further to agree with all recognition criteria given in IAS 37 specially as per definitions and guidelines provided in Framework to IFRSs.
However, let me tell you that provision for bad debts is in fact a provision for impairment. For assessing it further, you have to explore the material in IAS 36 (provisions related to impairment of financial assets). Again, in one way or other it can be proved logical under both IASs.
Let me assure you provision for doubtful debts is not a provision in respect of some future expenditure. It is related to some past event and the loss is PROBABLE (not certain) at balance sheet date.
Regards,
However, let me tell you that provision for bad debts is in fact a provision for impairment. For assessing it further, you have to explore the material in IAS 36 (provisions related to impairment of financial assets). Again, in one way or other it can be proved logical under both IASs.
Let me assure you provision for doubtful debts is not a provision in respect of some future expenditure. It is related to some past event and the loss is PROBABLE (not certain) at balance sheet date.
Regards,
