To the extent that these conditions are changing, the percentages will require appropriate adjustment. 3. GAAP requires the allowance method because it provides for a matching of current revenues with related expenses, and it reports the receivables at their net realizable value. The direct write-off method is easy to apply and is objective but does not provide for proper matching of revenues and expenses nor appropriate valuation of receivables...
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The direct write-off method is easy to apply and is objective but does not provide for proper matching of revenues and expenses nor appropriate valuation of receivables. 4. (a) Adjustments to be made: Age the receivables (including the dishonored notes) in order to determine the amount by which to increase Allowance for Bad Debts or to create an allowance balance if none exists...
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