Anonymous
Share this content
5

Should I disclose this bad debt in the P&L?

Material bad debt affecting true and fair view in FRS 102 accounts

Didn't find your answer?

Search AccountingWEB

I'm doing a set of FRS 102 accounts for a small company. Paragraph 1A requires the accounts to show a true and fair view. They had a bad debt of £50k during the year. Turnover was £1.3m, gross profit was £350k and profit before tax was £30k. Obviously it is material. I think it should go on the face of the P&L between gross profit and operating profit in order to show a true and fair view but my Taxfiler software doesn't seem to show a way of doing this.

Two questions. 1) Am I right about this? 2) If so, how the devil do I show it in Taxfiler?

I could ask a third. Is it really worth my while agonising about this?

Replies (5)

Please login or register to join the discussion.

Psycho
By Wilson Philips
10th Sep 2019 20:02

Answer to 3 - No

Dump it in overheads (or wherever Taxfiler insists on putting it) and be done with it

Thanks (0)
Hallerud at Easter
By DJKL
10th Sep 2019 21:19

No option of an exceptional item after operating profit?

We had last year a large credit- overprovision on a statutory repair which we managed to negotiate to get halved by the council releasing a £125,000 credit to our P & L.

I managed to persuade TaxCalc to let me disclose as a distinct line however could not get a direct note number appended on the P & L so had to throw in a note at foot of accounts not linked to P & L explaining the transaction.

https://www.frc.org.uk/getattachment/69f7d814-c806-4ccc-b451-aba50d6e8de...(March-2018).pdf

SEE :-

Notes supporting the income statement
1AC.32 The amount and nature of any individual items of income or expenses of exceptional size or incidence must be stated. (Schedule 1, paragraph 61(2))
Paragraph 5.9A addresses a similar requirement in relation to material items.

* 5.9A When items included in total comprehensive income are material, an entity shall disclose their nature and amount separately, in the statement of comprehensive income (and in the income statement, if presented) or in the notes.

Thanks (0)
avatar
By johnt27
11th Sep 2019 13:15

1. You're right, but I'd tend to disclose in the notes rather than put on the stat P&L.
2. No idea, never used Taxfiler.
3. Of course it is, if you take pride in your work and hold yourself out to be a professional.

Thanks (0)
Replying to johnt27:
avatar
By Jdopus
11th Sep 2019 15:03

Why would you disclose it in the notes rather than write it off? If it's a bad debt there's Corporation Tax relief on it and it should be accounted for as a loss. You can even give your client the good news that writing it off saves them a bit of tax.

Thanks (0)
Replying to Jdopus:
Hallerud at Easter
By DJKL
11th Sep 2019 15:51

I think he/she means disclose the fact that it has been written off in the notes to the accounts rather than disclose but not write off.

Given its size it likely requires disclosed as the two links I posted above from FRS102 indicate.

I personally prefer ability to disclose on face of the P & L but I think that requirement is possibly re full accounts, the small company opt out seems to suggest an either/or/both approach.

Thanks (0)
Share this content