is depreciation a provision, why?
is bad debts written off a provision, why?
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Provisions
Replies (2)
Quick Summary
Depreciation is a non cash charge. Provision is a liability. Depreciation is not a provision because depreciation is charged annually and there is no present obligation from past events.
Provision is created for bad and unrecoverable debts. Writing off those bad debts which are not recoverable is a reduction in provision. So, bad debts written off is not a provision.
Second question, bad debts can be directly written off or a provision can be created. When a provision fails, it is written off.
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