Creation of Provision for Doubtful Debts

Volume: 6 Number: 4 September 1, 2016
  • Yuriy Ivanovich Sigidov
  • Marina Aleksandrovna Korovina
  • Aleksander Ivanovich Trubilin
  • Viktor Vilenovich Govdya
  • Nadezhda Konstantinovna Vasilieva
EN

Creation of Provision for Doubtful Debts

Abstract

The purpose of this study is to develop methods of creation of provision for doubtful debts. It was proposed to use two methods of provisioning for doubtful debts, both individually and in the aggregate. The first method is percentage of sales approach that is used in international standards. Its use requires to calculate the average percentage of doubtful debt by determining the average ratio of the outstanding accounts receivable to revenue volume over 3-5 years. This method is recommended for use to organizations with a large number of debtors with minor amounts of debts. The second method, developed by the authors, takes into account the timing of incurring of debt, the solvency of the debtor and the risk of non-repayment. It is advisable to apply for debtors with significant amounts of debt. Using the author's method, the provision for doubtful debts was calculated according to the data from the existing company "Elephant" LLC for 2015, which resulted in revealing the deviation in the amount of the provision from the actual data. The use of the proposed methods will improve the reliability of the accounting (financial) statements in terms of the reflection of the receivables and simplify the work of accountants in finding a method to create a provision for doubtful debts.

Keywords

Details

Primary Language

English

Subjects

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Journal Section

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Authors

Yuriy Ivanovich Sigidov This is me

Marina Aleksandrovna Korovina This is me

Aleksander Ivanovich Trubilin This is me

Viktor Vilenovich Govdya This is me

Nadezhda Konstantinovna Vasilieva This is me

Publication Date

September 1, 2016

Submission Date

September 1, 2016

Acceptance Date

-

Published in Issue

Year 2016 Volume: 6 Number: 4

APA
Sigidov, Y. I., Korovina, M. A., Trubilin, A. I., Govdya, V. V., & Vasilieva, N. K. (2016). Creation of Provision for Doubtful Debts. International Journal of Economics and Financial Issues, 6(4), 1542-1549. https://izlik.org/JA46JT29SM
AMA
1.Sigidov YI, Korovina MA, Trubilin AI, Govdya VV, Vasilieva NK. Creation of Provision for Doubtful Debts. IJEFI. 2016;6(4):1542-1549. https://izlik.org/JA46JT29SM
Chicago
Sigidov, Yuriy Ivanovich, Marina Aleksandrovna Korovina, Aleksander Ivanovich Trubilin, Viktor Vilenovich Govdya, and Nadezhda Konstantinovna Vasilieva. 2016. “Creation of Provision for Doubtful Debts”. International Journal of Economics and Financial Issues 6 (4): 1542-49. https://izlik.org/JA46JT29SM.
EndNote
Sigidov YI, Korovina MA, Trubilin AI, Govdya VV, Vasilieva NK (September 1, 2016) Creation of Provision for Doubtful Debts. International Journal of Economics and Financial Issues 6 4 1542–1549.
IEEE
[1]Y. I. Sigidov, M. A. Korovina, A. I. Trubilin, V. V. Govdya, and N. K. Vasilieva, “Creation of Provision for Doubtful Debts”, IJEFI, vol. 6, no. 4, pp. 1542–1549, Sept. 2016, [Online]. Available: https://izlik.org/JA46JT29SM
ISNAD
Sigidov, Yuriy Ivanovich - Korovina, Marina Aleksandrovna - Trubilin, Aleksander Ivanovich - Govdya, Viktor Vilenovich - Vasilieva, Nadezhda Konstantinovna. “Creation of Provision for Doubtful Debts”. International Journal of Economics and Financial Issues 6/4 (September 1, 2016): 1542-1549. https://izlik.org/JA46JT29SM.
JAMA
1.Sigidov YI, Korovina MA, Trubilin AI, Govdya VV, Vasilieva NK. Creation of Provision for Doubtful Debts. IJEFI. 2016;6:1542–1549.
MLA
Sigidov, Yuriy Ivanovich, et al. “Creation of Provision for Doubtful Debts”. International Journal of Economics and Financial Issues, vol. 6, no. 4, Sept. 2016, pp. 1542-9, https://izlik.org/JA46JT29SM.
Vancouver
1.Yuriy Ivanovich Sigidov, Marina Aleksandrovna Korovina, Aleksander Ivanovich Trubilin, Viktor Vilenovich Govdya, Nadezhda Konstantinovna Vasilieva. Creation of Provision for Doubtful Debts. IJEFI [Internet]. 2016 Sep. 1;6(4):1542-9. Available from: https://izlik.org/JA46JT29SM