Which of the following method is not acceptable under both IFRS and ASPE?
A)Percentage of sales method
B)Direct write-off method
C)Aging of accounts receivable
BT: Knowledge

Question

Quizplus · Accepted Answer

The direct write-off method is not acceptable under both IFRS and ASPE as it does not accurately reflect the true financial position of the company since bad debt expenses are recognized only when they become uncollectible. This method violates the matching principle of accounting, which requires that expenses be recognized in the same period as the related revenues. The percentage of sales method and aging of accounts receivable are both acceptable under both IFRS and ASPE as they provide a reasonable estimate of the amount of bad debts that are expected based on past experience and current economic conditions.

Which of the Following Method Is Not Acceptable Under Both