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Which of the following is an Accounting Estimates? A- Bad Debts B- Useful Life of Asset C- All of above D- None of above

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Question added by Muhammad Faheem , Consultant- Accounts, Audit & Taxation , Basim Associates
Date Posted: 2013/12/05
Rehan Qureshi
by Rehan Qureshi , Financial Consultant , Self Employeed

Option B is the right choice

Subhranshu Ganguly
by Subhranshu Ganguly , Quality Analyst. , WIPRO

Bad debt is an accounting estimate. From previous experiancethe accountant can estimate the reserve that can be kept for bad debts. Life of an asset depends on factors that are beyond the control of accounting. Like change in technology or change in demand for a product can have strong effects on life of an asset .Eg the change in technology with the easy economic availablity of the PC printer combination rendered the electronic typewriter useless with in a couple of years.

Menerva Melad
by Menerva Melad , Account Executive, Key Accounts , Graphic Home Company

My answer is C = All of above mean both are accounting esstimate

Muhammad Waqas
by Muhammad Waqas , Senior Accountant , Tamimi Global Co. Ltd. (Tafga, Head Office)

My answer is C = All of above mean both are accounting esstimates. An Accountant not to be exactly sure about the the original/Exact amount of Bad debts and useful life of assets so an accountant Esstimate Accounting in thses condition.

 

Amir Iqbal
by Amir Iqbal , Debt Collection Officer , Averda Environmental Services LLC

Useful life of asset is an accounting estimate.. bcz bad debts are treated when they realized

shaheryar malik
by shaheryar malik , General Accountant , Valtorque Valves Trading LLC

Let us analyse by your options;

a) Bad Debts: Professionaly it is not an estimate, it is a neccessary part of company accounting manual and a clear policy is defind in the accounting manual for ranking a debt as a bad debt which is later on followed by a "Writting off Bad Debt" Policy. Like a company can draft a policy that all the debts beyond2 years of time are "Bad Debts" than irrespective of estimates, real time financial data will show the exact Bad Debts value.

B) Useful life of Assets: This head is normally used for taxation accounting for charging the depreciation to get the tax benefits. Like in Pakistan a vehicle is subject to20% depreciated yearly in final accounts which means that Taxation department considers the useful life of a vehicle as5 years. But if we talk about Management accounting than Useful life will be considered as the life mentioned by the Manufacturer or Vendor. In case of Generic Assets like Furniture and likewise You can call it as an "ESTIMATE" but for Majority of the Assets its not an "Estimate"Last two options need no comments in the light of above explanation.Thanks

Deleted user
by Deleted user

B - Useful life of an asset  is an accounting estimate

Deleted user
by Deleted user

all

DANISH RIAZ
by DANISH RIAZ , Senior Auditor & Business Consultant , Alliott Hadi Shahid Chartered Accountants

B

Rashad Moursi
by Rashad Moursi , Finance Director & Business Development, International Business Transformer Owners Repr. - Hotels , Investment and financial

- usfuel life of assets is an accounting error, "thats where the usfule life containing assets manual"

- bad debt is an accounting estimate

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