Mary Lou
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Previous Year P&L disclosure

Previous Year P&L disclosure

Can someone please help on how I disclose a previous year P & L adjustment.

A provision for a bad debt was made in a previous years accounts.  The following year cash was reveived for the provision reversing the bad debt. 

The problem is HMRC will not allow the 1st years bad debt provision therefore CT  should have been a higher amount and the following year a lower amount.

How is the cash received shown if not by reversing the bad debt?  Can I obmit the increase in the second years P&L and add an additional line in Capital & Reserves b/f that will increase the previous years profits?


Called up share account  ...........

Reserves b/f                    ..............

Adjustment b/f reserves  ..............

Profit & Loss                    .................

Shareholders Funds       ....................

Thank you in advance for any comments



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By alattax
08th Aug 2012 12:56

There is no need to adjust the previous years P & L account. It was correct at the time.   

The receipt in the following year comes in as a credit to the bad debt account ( P & L ).

As the deduction has been disallowed in the first year the credit is non taxable in the following year, so make the adjustment to your tax computation accordingly.



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