Slash ForwardClassic Logo

Classic

Depreciation

Depreciation

Provision = risk of default (not paying)

Depreciation Image Depreciation Image

Provisions includes:
   - non-depreciable fixed assets (land, works of arts)
   - equity securities (bonds)
   - stocks
   - receivables (debtors, someone who owes you)

Cases

Update in provision

  • Customer: Morel - Amount: 69600 (including VAT) - Existing Provision: 14500
  • Observation: Provision update: 40%

First Case Image First Case Image

New customer to be provisioned

  • Customer: Duval - Amount: 50400 (including VAT) - Observation: New customer to be provisioned (20%)

Second Case Image Second Case Image

Insolvent customer (loss or reversal provision)

  • Customer: Romain - Amount: 28800 (including VAT) - Existing Provision: 5800
  • Observation: Customer is insolvent

Third Case Image Third Case Image

Partial payment

  • Customer: Franc - Amount: 81800 (including VAT) - Existing Provision: 14200
  • Observation: Payment of 5000$ and provision update 20%.

Fourth Case Image Fourth Case Image

Customer will be insolvent in N

  • Customer: Hamon - Amount: 38400 (including VAT) - Observation: Customer will be insolvent in N

Fifth Case Image Fifth Case Image

Recordings

From our cases, we have the following results:

Cases Recap Image Cases Recap Image

Depreciation

  • Account 68: Depreciation, amortization, impairment and provisions
  • Account 49: Provisions for impairment of accounts receivable

Depreciation Recording Image Depreciation Recording Image

Reversal of provision

  • Account 49: Provisions for impairment of accounts receivable
  • Account 78: Reversal of depreciation, amortization, impairment and provisions

Reversal Recording Image Reversal Recording Image

New contentious customers

  • Account 416: Customers - Doubtful accounts
  • Account 411: Customers

New Doubtful Customer Recording Image New Doubtful Customer Recording Image

Loss

  • Account 65: Other operating expenses
  • Account 44451: V.A.T. payable
  • Account 411: Customers
  • Account 416: Customers - Doubtful accounts

Loss Recording Image Loss Recording Image

Depreciation of assets

Inventory Value < Original Value
   = probable loss = provision

Capital gain (inventory value > original value) = no entry

Financial assets

200 investement securities at 240eachandworthnow240** each and worth now **210 each.

  • Original Unitary Price: $240\$240
  • Inventory Unitary Price: $210\$210
  • Original Value: $240×200=$48000\$240 \times 200 = \$48 000
  • Inventory Value $210×200=$42000\$210 \times 200 = \$42 000

LOSS = $48000$42000=$6000\$48 000 - \$42 000 = \$6 000

LOSS = (Original ValueInventory Value)×Quantity(\text{Original Value} - \text{Inventory Value}) \times \text{Quantity}
= Original Value×QuantityInventory Value×Quantity\text{Original Value} \times \text{Quantity} - \text{Inventory Value} \times \text{Quantity}

Financial Loss Image Financial Loss Image

Inventory stock

500 iPhones X at $900 each and worth now $797 each.

  • Original Unitary Price: $900\$900
  • Inventory Unitary Price: $797\$797
  • Original Value: $900×500=$450000\$900 \times 500 = \$450 000
  • Inventory Value $797×500=$398500\$797 \times 500 = \$398 500

LOSS = $450000$398500=$51500\$450 000 - \$398 500 = \$51 500

Stock Loss Image Stock Loss Image

Last updated on

AI Icon
Ask Clement-GPT
Use AI to answer questions

On this page