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BYP 8-5 (Continued)
Finally, the decision hinges on: (1) the accuracy of the estimate of
own accounts receivable.
BYP 8-6 COMMUNICATION ACTIVITY
Example:
Dear Jill,
The three methods you asked about are methods of dealing with uncollectible
net credit sales of the current year. This basis of estimating emphasizes the
matching of expenses with revenues.
Under the percentage-of-receivables basis, management establishes a per-
centage relationship between the amount of receivables and expected losses
The direct write-off method does not estimate losses and an allowance account
Sincerely,
BYP 8-7 ETHICS CASE
(a) The stakeholders in this situation are:
The president of Diaz Co.
The controller of Diaz Co.
The stockholders.
statement.
(c) Diaz Co.’s growth rate should be a product of fair and accurate financial
BYP 8-8 ALL ABOUT YOU
(a) There are a number of sources that compare features of credit cards. Here
are three: www.creditcards.com/, www.federalreserve.gov/pubs/shop/,
and www.creditorweb.com/.
and cash rebates.
(c) Answer depends on present credit card and your personal situation.
BYP 8-9 FASB CODIFICATION ACTIVITY
(b) The conditions under which receivables exist usually involve some
degree of uncertainty about their collectibility, in which case a contin-
gency exists.
conditions are met:
a. Information available prior to issuance of the financial statements
indicates that it is probable that an asset has been impaired at the
date of the financial statements.
Losses from uncollectible receivables shall be accrued when both the
preceding conditions are met. Those conditions may be considered in
IFRS8-1 IFRS EXERCISES
IFRS requires that specific loans and receivables be reviewed for impairment
and then all loans and receivables as a group be reviewed. This “two-
IFRS8-2 INTERNATIONAL FINANCIAL REPORTING PROBLEM
year.
(b) Note 3.14 states that loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an
active market.
during 2011.
(d) Note 18 indicates that the provision for impairment of receivables was
