The appropriate method to use when bad debts are significant is the allowance method.

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The allowance method is the appropriate method to use when bad debts are significant. This method involves estimating the amount of uncollectible accounts at the end of the accounting period and creating an allowance for doubtful accounts. This allowance is then used to reduce the amount of accounts receivable reported on the balance sheet, thereby reflecting a more accurate picture of the company's financial position.

The Appropriate Method to Use When Bad Debts Are Significant