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

Question

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?

Answer 1

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

Answer 2

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.