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A sold good to B for $10000 on60 days credit on30.11.14. B declared bankrupt on25.12.14. A approached you to take your advice whether any provision required for $10000 because B became bankrupt.
You are requested to advise him accounting treatment as per IFRS.
A provision of bad debts to be recognized with the whole amount $10000 against the customer B
As per IAS18, when there is uncertainty in ultimate collection of amount then revenue recognisaton should be postponed till the time it becomes certain . if already recognized in the books , then needs to make provision to that extent
