02-03-2005, 04:43 AM
Scenario
Company A - a debt collection agency undertakes to collect money on behalf of Company B for overdue invoices.
Currently, it is using a strange accounting methodolgy to book stock (inventory) comprising of its fee for realisable receivables. Ofcourse the other side is a credit to income.
Only a certain %age of realisable receivables is booked. Realisable receivables % is calculated via performing a historic review (3-months rollover basis) of collection trends. So for example, if such analysis reveals that only 30% of such debt is collectible, the company books only the corresponding fee as revenue (Debit in stock)
Is this treatment correct under IAS/IFRS?
PS. Aparently the local tax authorities require such accelerated recognition... ofcourse for tax purposes.
http//s4.invisionfree.com/AccountingWorld/
Company A - a debt collection agency undertakes to collect money on behalf of Company B for overdue invoices.
Currently, it is using a strange accounting methodolgy to book stock (inventory) comprising of its fee for realisable receivables. Ofcourse the other side is a credit to income.
Only a certain %age of realisable receivables is booked. Realisable receivables % is calculated via performing a historic review (3-months rollover basis) of collection trends. So for example, if such analysis reveals that only 30% of such debt is collectible, the company books only the corresponding fee as revenue (Debit in stock)
Is this treatment correct under IAS/IFRS?
PS. Aparently the local tax authorities require such accelerated recognition... ofcourse for tax purposes.
http//s4.invisionfree.com/AccountingWorld/
