IN amalgamation when there is inter company owing why do we calculate the provision for doubtful debts on the total balance of debtors and not on the net amount i.e after deduction the interco. debt as it cant be a bad debt ??
Naveen Jain (Article Trainee) (134 Points)
11 February 2013IN amalgamation when there is inter company owing why do we calculate the provision for doubtful debts on the total balance of debtors and not on the net amount i.e after deduction the interco. debt as it cant be a bad debt ??
CMA Ashutosh Kumar Gupta
(Unit Financial Controller)
(1015 Points)
Replied 11 February 2013
The trading debts-intercompany do form the part of provisioning hence the crux of the query is to determine whether such debts are trading debts or loans. Had there been the relationship of trading debts inter-company debtors (including inter-company) will be the basis for applying the provisions.
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