Do you regard the provision for doubtful debts as an operating expense.

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Oct 29 in Banking by 41071 (681 points)

I am aware that people use the provision of doubtful debts to relate to expenses on a particular income statement whereas others relate it to assets on the balance sheets. Either way, do you regard it as an operating expense?

2 Answers

TheOtherTink Oct 30

Yes, I would certainly regard bad debts owed to my business as an operating expense.

ProdigalSon Oct 30
The provision is always related to income because the value itself is anticipated bad debt.  The only way a person is going to relate the provision to assets is if they are using asset values to determine how much their provision should be. 

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