Hello Friends...
Some debts relating to previous years are not recoverable, however other dues from the same party has already been received from the same party. so what will the accounting treatment.
Thank you
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Debt not recoverable
Replies (4)
If the debts are of revenue nature and no possibility of recovery is there, it will charged to P&L as bad debts. However, if chances of recovery are there, it will be reclassified as doubtful debts and 100% provision for doubtful debts is to be created.
If the debts are of Capital nature, it will be a capital loss.
the debt is revenue i nature.
let me clarify my doubt. suppose there were 10 bills amounting Rs.1 croce in 2011-12. out of that party is not ready to pay Rs. 20 lakh, because the party is not accepting our invoice relating to that amount. sale could not be reversed in that year. now what will be accounting treatment
Pls also explain the nature of revenue i.e. whether it is sales of goods or rendering of services. If it is sales of goods, whether the goods were returned by customer or not. In other case whether you are required to provide the services again or not.
it,s service
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