financial year-end closing of 2012 module #1 part 2 /3
DESCRIPTION
„ESTIMATES: PROVISION FOR DOUBTFUL DEBT, INVENTORY PROVISIONS, PROVISIONS FOR LIABILITIES” SELF-CHECK OF ACCOUNTING CALCULATIONS 24EasyAudit is an additional tool to traditional consulting in the financial and tax reporting and in many instances it can replace such consulting. See what kind of services are available in 24EasyAudit! The 24EasyAudit service is not focused on presenting technical aspects, regulations, interpretations, jurisdiction, etc. but places stress on solving accounting and reporting problems. The 24EasyAudit service is not focused on presenting technical aspects, regulations, interpretations, jurisdiction, etc. but places stress on solving accounting and reporting problems. The support provided to users by 24EasyAudit results from an innovative web application combining a number of financial audit techniques and methods with an expanded systems of tooltips and help. How to calculate cash flow? How to calculate deferred tax? How to calculate inventory provision? How to calculate provision for debtors? Find us: https://24easyaudit.com/ facebook.com/24EasyAudit linkedin.com/company/24easyaudit slideshare.net/24EasyAudit twitter.com/24EasyAudit SAMODZIELNE SPRAWDZANIE KSIĘGOWYCH KALKULACJI 24EasyAudit to uzupełnienie tradycyjnego doradztwa w sprawozdawczości finansowej i podatkowej, a w wielu przypadkach takie doradztwo zastępuje. Zapoznaj się z usługami wbudowanymi w 24EasyAudit ! Serwis 24EasyAudit nie skupia się na prezentowaniu suchych treści merytorycznych, przepisów, interpretacji, orzecznictwa itp., lecz kładzie nacisk na praktyczne rozwiązywanie problemów księgowych i sprawozdawczych. Serwis 24EasyAudit to pakiet usług elektronicznych z zakresu rachunkowości i podatków dostarczanych on-line przez stronę www, który adresowany jest głównie do księgowych i dyrektorów finansowych, działów sprawozdawczości, biur rachunkowych, kontrolerów finansowych, audytorów wewnętrznych, biegłych rewidentów i doradców podatkowych, pracujących dla lub obsługujących małe, średnie i duże firmy prowadzące pełną księgowość, a także do kierownictwa, organów nadzorczych i właścicieli takich podmiotów. Jak liczyć przepływy pieniężne? Jak liczyć podatek odroczony? Jak liczyć odpis na zapasy? Jak liczyć odpis na należności? Znajdź nas: https://24easyaudit.pl/ facebook.com/24EasyAudit linkedin.com/company/24easyaudit slideshare.net/24EasyAudit twitter.com/24EasyAuditTRANSCRIPT
.
Financial year-end closing of 2012 Module #1 Part 2 /3
„ESTIMATES: PROVISION FOR DOUBTFUL DEBT, INVENTORY PROVISIONS, PROVISIONS FOR
LIABILITIES”
Training on accounting and income tax aspects related to financial year-end closing of 2012. Common errors and fast remedies.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
• Module 1: Estimates: provision for doubtful debt, inventory provisions, provisions for
liabilities
• Module 2: Fixed assets: impairment testing of fixed assets, depreciation, accounting for
financial leasing
• Module 3: Cash flow statement
• Module 4: Corporate income tax, recognition of income and expenses – Deferred tax and
Corporation tax
• 24EasyAudit: Information on the Web application supporting accounting at balance sheet
closing for 2012
Content of the training
.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Module 1: Provision for doubtful debts
.
Do you know that …?
An assumption is often made that there is no
problem with current debtors and no analysis
is made of collection records.
However, provision for debtors should also
apply to debtors that are not overdue since
most probably a portion of them will become
uncollectible in the future. An appropriate
analysis will determine the potentially
uncollectible portion.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Module 1: Provision for doubtful debts
Theory:
• Receivables are adjusted by provisions
subject to probability of collection,
• The principle of prudent valuation requires
updates of asset valuation => update of
asset value (IAS 2 par.28, 33)
• provisions are recognised to debtors in
liquidation, bankrupt debtors, those that
question the debt, overdue and non-
overdue when the probability of non-
collection is material (IAS 39, par.58, 59)
.
Practice - examples of errors:
• Most often debtors are overvalued
• Non-overdue debtors are not provided for
although some of them may become
doubtful in the future
• provision estimates are unrealistic, not
related to the actual values of the written
down balances.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Module 1: Provision for doubtful debts
Real life example:
• The structure of trade debtors as at
31.12.2012: GBP 1,000 current, GBP 700
overdue, of which GBP 200 over one year
• The structure of trade debtors as at
31.12.2011: GBP 1,200 current, GBP 500
overdue, of which GBP 150 over one year
• Debtors written-down in 2012 amounted to
GBP 150
.
Solution – how to calculate provisions of
debtors …?
• First step is to create formula for %
provision
• then to calculate bad debt provision
amount
% 𝑝𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 = 200 + 150
1,200 + 500= 20.6%
𝑓𝑜𝑟𝑚𝑢𝑙𝑎 𝑓𝑜𝑟 % 𝑝𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 = 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 > 1 𝑦𝑒𝑎𝑟 𝑎𝑠 𝑎𝑡 31. 𝐷𝑒𝑐. 12 + 𝑑𝑒𝑏𝑡𝑜𝑟𝑠 𝑤𝑟𝑖𝑡𝑡𝑒𝑛 − 𝑜𝑓𝑓 𝑖𝑛 2012
𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑎𝑠 𝑎𝑡 31. 𝐷𝑒𝑐. 11
𝑏𝑎𝑑 𝑑𝑒𝑏𝑡 𝑝𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 𝑎𝑚𝑜𝑢𝑛𝑡 = 20.6% × 1000 + 700 = £ 350 𝑎𝑠 𝑎𝑡 31. 𝐷𝑒𝑐. 12
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Module 1: Provision for doubtful debts
Errors can arise when:
• You have no precise idea how to calculate
provisions for debtors
• You do not refer your calculation of the
provision to what happened to the debtors
in the past (aging analysis, written-off
balances, etc.)
• You have scarce information and this is
the only thing you can rely on in calculating
the provisions for debtors
• You have no opportunity for an
independent verification of your
calculations
.
Support provided by the 24EasyAudit
provision calculator …?
• With 24EasyAudit you will assess if the
provisions for debtors are reasonable or
your will calculate the provisions.
• With tested auditing techniques underlying
24EasyAudit, you will calculate the bad
debt provision in no time or you will check
if the applied rules are reasonable.
ATTENTION: : With 24easyaudit and in built
modul you can quickly calculate provision for
doubtful accounts- click here to find out more
information about calculation of doubtful
accounts provisions with support of
24EasyAudit.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
24EasyAudit helps to check and calculate
24EasyAudit Expert System supports
accounting, auditing and consulting in
specialized calculations such as:
• Cash flow statement (in accordance with
IFRS)
• Deferred tax and UK corporation tax
• Testing for impairment of fixed assets
• Provisions for debtors
• Inventory provisions
• Provisions for liabilities, including provisions
for unused holiday accruals, retirement
bonus, warranty expenses
• Finance lease
.
Click here to watch a video
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Intellectual property of 24EasyAudit
• The 24EeasyAudit service, including the graphic and works marks of the Service names
(logo), software of the Service as well as all materials and content provided in the Service,
graphic solution and all other solutions are subject to copyright in accordance with
international law.
• The appearance, operating principles and concept of the Service constitute a protected
industrial design and are subject to protection in compliance with the Act on industrial
property – both for 24EasyAudit and 24 SamAudytuj.
© 2012 EASYAUDIT Sp. z o.o. with its registered office in Gdynia. All rights reserved. December 2012 https://24easyaudit.com.
Contact with 24EasyAudit
Iwona Ekman, President of the Management Board, [email protected], Tel. +48 660
484 064, direct line +48 58 746 30 42
Sławomir Ekman, Proxy, Originator and developer of the 24EasyAudit website, ACCA
Qualified Member, Polish PCA, [email protected], Tel. +48 600 094 919, Direct line
+48 58 746 30 41
Registration data: 24EasyAudit Sp. z o.o., ul. Msciwoja 9 lok. 10a, 81-361 Gdynia, KRS 0000374259, NIP 586-226-29-76, REGON
221152658. 24EasyAudit Spółka z ograniczona odpowiedzialnoscia S.K.A. ul. Msciwoja 9 lok. 10a, 81-361 Gdynia, KRS
0000428240, NIP 586-227-79-89, REGON 221715185 Share capital PLN 50,000, fully paid-up.