bad debt

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Bad debt

A debt that is written off and deemed uncollectible.

Bad Debt

Debt from a credit sale that the creditor is unable to collect. Debt becomes bad debt when the creditor has made all reasonable efforts to collect the debt but has been unable to do so. Often, this occurs when the debtor declares bankruptcy or when pursuing collection attempts further will cost more than the debt itself. A company writes off bad debt as an expense, which reduces its taxable income. However, it also deprives the company of cash flow that is ultimately necessary to keep it in business.

bad debt

an accounting term for money owed to a company by customers or borrowers which is highly unlikely to be paid because, for example, a customer has become insolvent (see INSOLVENCY). Such bad debts are written off against the PROFITS of the trading period as a business cost. See CREDIT CONTROL, DEBTORS RATIO, DOUBTFUL DEBTS.

bad debt

an accounting term for money owed that is unlikely to be paid because, for example, a customer has become insolvent (see INSOLVENCY). Such bad debts are written off against the PROFITS of the trading period as a business cost. See CREDIT CONTROL.
References in periodicals archive ?
Under the second method, which is a variation of the Black Motor formula, a taxpayer can determine uncollectible NAE amounts by multiplying its year-end accounts receivable balance by a three-year moving-average percentage, reflecting its actual NAE as to its accounts receivable balance at the beginning of the current tax year and the two immediately preceding tax years.
5 million additional provision for estimated uncollectible revenue in the quarter ended September 30, 2009, net income and diluted earnings per share for that quarter would have been $7.
448(d)(5) allows an accrual-basis service provider to avoid accruing income on the portion of its receivables estimated to be uncollectible, based on the provider's experience.
the current 11%), an uncollectible expense tracker, and a revenue decoupling mechanism.
Worthlessness is evidenced by the fact that legal action to enforce payment would result in an uncollectible judgment or by a settlement in bankruptcy.
In 1985 Peat discovered 30% of Top Brass's accounts receivable were uncollectible.
Sixth graph, first sentence of release dated July 9, 2008 should read: The $33 million request, including $13 million in revenues previously approved by the DPUC but not being collected by the Company due to reduced kilowatt-hour sales, contains uncollectible, capital and operations & maintenance (O&M) expenses as well as an appropriate rate of return (sted The $33 million request, including $13 million in revenues previously approved by the DPUC but not being collected by the Company due to reduced kilowatt-hour sales and contains uncollectible, capital and operations & maintenance (O&M) expenses as well as an appropriate rate of return).
Includes $69,000 of gain deferred from the sale of assets and recognized as a result of payment of related notes and $65,000 of allowances for uncollectible notes and mortgages receivable.
448-2T(b) describes the nonaccrual-experience method and a specific formula for determining uncollectible amounts.
In 1989, over 175 million tax returns were filed and the IRS carried $66 billion in accounts receivable, $8 billion of which was rendered uncollectible.
Given the size of reinsurance recoverables relative to surplus, uncollectible reinsurance can adversely affect an insurance company's financial strength.
When the firm bills a client for out-of-pocket expenses but the client does not pay, the firm can claim a bad debt deduction when the debt is worthless and uncollectible and legal action to enforce payment would not result in collection.