Receivable

Question 1

Accounting Standards:

Answer 1

• Accounts receivable are primarily governed by PFRS 9 (Financial Instruments) and PAS 1 (Presentation of Financial Statements).

Question 2

Scope of the Applicable Standard:

Answer 2

• PFRS 9: Provides guidance on the recognition, measurement, impairment, and derecognition of financial assets, which include accounts receivable.
  
  • PAS 1: Ensures the proper presentation of financial statements, including the presentation of accounts receivable.

Question 3

Amounts due from customers for goods sold or services performed as part of normal business operations.

Answer 3

Accounts Receivable

Question 4

The weighted average of credit losses with the probability of default as the weight.

Answer 4

Expected Credit Losses (ECL)

Question 5

Recognition: Initial and Subsequent:

Answer 5

• Initial Recognition: Accounts receivable are recognized when an entity has a right to consideration that is unconditional (i.e., only the passage of time is required before payment of that consideration is due).
  
  • Subsequent Recognition: Accounts receivable are subsequently measured at amortized cost, using the effective interest method, adjusted for any loss allowance.

Question 6

Measurement: Initial and Subsequent:

Answer 6

• Initial Measurement: Accounts receivable are measured at the transaction price, which represents the amount of consideration to which an entity expects to be entitled.
  
  • Subsequent Measurement: Accounts receivable are measured at amortized cost, less any impairment losses. Impairment is assessed using the expected credit loss model under PFRS 9, which considers historical, current, and forward-looking information.

Question 7

Journal Entries:

Answer 7

• Initial recognition of accounts receivable:
  

  plaintext
     Dr. Accounts Receivable
     Cr. Sales Revenue
    

• To record a payment received from a customer:
  

  plaintext
   Dr. Cash
   Cr. Accounts Receivable

• To record an allowance for doubtful accounts:
  

  plaintext
   Dr. Bad Debt Expense
   Cr. Allowance for Doubtful Accounts

• To write off an uncollectible receivable:
  ```plaintext
  Dr. Allowance for Doubtful Accounts
  Cr. Accounts Receivable

Question 8

Presentation

Answer 8

• Accounts receivable are presented on the balance sheet as a current asset, net of any allowance for doubtful accounts. PAS 1 requires that accounts receivable be presented separately if they are material.

Question 9

Disclosure

Answer 9

• Disclosures related to accounts receivable should be made in the notes to the financial statements, including:
  
  • The accounting policies for recognizing and measuring accounts receivable.
  • A reconciliation of the opening and closing balances of the allowance for doubtful accounts.
  • Information about the credit risk, including an analysis of the age of accounts receivable.
  • Details of any significant concentrations of credit risk.