All those companies that have extended credit or services and have uncollectible accounts
will now be able to recoup a portion of what's owed to them.
Gross Receipts shall mean those amounts of money which the franchisee receives from its customers for the retail sale and/or transportation of gas within the Franchise Area as adjusted for refunds, the net write-off of uncollectible accounts
, corrections, or other adjustments.
The case focuses on fundamental changes to the revenue recognition model and potential changes to the timing and measurement of revenue and related transactions such as product or service warranties, merchandise returns, uncollectible accounts
, and multiple deliverables.
The Association carries its accounts receivable at cost less an allowance for uncollectible accounts
million provision for uncollectible accounts
and $59 million in
Accordingly, it must report the amounts attributable to the allowance for uncollectible accounts
receivable on line 32 (Bad debt expense), and must separately state and adequately disclose the amounts attributable to the reserve for pending litigation and the warranty reserve on line 35 (Other expense/deduction items with differences).
Allowances for uncollectible accounts
that are not correlated with receivables;
Let's take the company earning 10% pre-tax return on annual sales of $1 million with a 5% uncollectible accounts
rate and average A/R balance of $100,000.
Additionally, the company experienced an $850,000 loss related to the writeoff of uncollectible accounts
receivable (primarily affecting three same store centers), the majority of which was attributable to a single contracting party having ceased business.
For example, when discussing accounts receivable, students should understand that an allowance for uncollectible accounts
is estimated at year-end so that expenses are matched with the related revenues.
After calculating or reviewing the allowance for uncollectible accounts
, the auditors were given new information (from either a client source or an independent credit agency) and asked to reconsider their original decision.