The direct write off method of accounting for the impairment of receivables
A) is never acceptable.
B) is an acceptable method when the effect of not applying the allowance method would be highly immaterial.
C) is specifically disallowed under IFRS.
D) usually results in the same net income as the allowance method.

Question

Quizplus · Accepted Answer

The direct write off method of accounting for the impairment of receivables is generally not acceptable under generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). However, it may be acceptable when the effect of not applying the allowance method would be highly immaterial. This means that if the amount of bad debts is insignificant, the direct write off method is acceptable.

The Direct Write Off Method of Accounting for the Impairment