[pc-pvt-content allow=”21,22,23,36,32,33″]
I. OBJECTIVE
1. To provide guidelines on the items included in trade and other receivables
II. DEFINITION OF TERMS
1. Accounts Receivable – It includes all receivables from customers
2. Accrued Interest Receivable – It includes all interest that is not yet received or still collectible.
3. Advances – It includes advances such as advances to suppliers for the purchase of goods/services and advances to employees for their salary.
4. Allowance for Doubtful Accounts – A contra asset account for receivable.
5. Claims Receivable – It includes claim such as claim for damages, claim for insurance and other claims.
6. Deposits – It includes the deposit to the lessor (security deposit), deposits for returnable containers, etc.
7. Notes Receivable – It includes all receivables from customers with promissory notes.
III. GENERAL POLICIES
The receivable shall be recognized if and only if:
• It is probable that future economic benefit will flow to the entity
• It can be measured reliably
Measurement:
a) Initial Measurement – Receivable is valued at its face value.
b) Subsequent Measurement – The percentage of aging accounts receivable will be used in estimating the bad debts. At the end of each period, the amount of potentially uncollectible accounts receivable is estimated and recorded as the allowance for doubtful accounts.
Accounts Receivable Aging Schedule
| Days Past Due: | % Uncollectible: |
| 0 to 30 | 2 |
| 31 to 60 | 4 |
| 61 to 90 | 7 |
| 91 to 120 | 10 |
| 121 to 150 | 20 |
| 151 to 180 | 50 |
| Over 180 days | Doubtful Account |
Receivable is presented as single line item TRADE AND OTHER RECEIVABLES and part of current assets:
• Accounts Receivable
• Accrued Interest Receivable
* It is base on the amount of past due accounts of customer.
• Advances
• Allowance for Doubtful Accounts
* It includes the estimates of all the account whose collection is doubtful. It is based on percentages set forth above.
• Claims Receivable
• Deposits
• Notes Receivable
IV. PROCEDURE FLOWCHART
Flowchart Title
(Not Applicable)
V. REFERENCE/INTERFACE PROCESS
Document Title
(Not Applicable)
VI. FORMS AND RECORDS
Form Title
(Not Applicable)
[/pc-pvt-content]