OPERATING DECISIONS. UNCOLLECTIBLE ACCOUNTS RECEIVABLE. When credit is extended, some amount of uncollectible receivables is generally inevitable. If uncollectible receivables are probable and can be estimated , an estimate should be made
An allocation of total cost of goods available for sale:
Cost of goods
(Beg. Inven. + Purch)
Cost of goods sold
The cost flow assumption used for accounting purposes
can be different from the physical flow of goods through
COST FLOW ASSUMPTIONS
First-in, first-out (FIFO)
Last-in, first-out (LIFO)
An asset may be recorded if it seems assured and the amount can be reasonably estimated. Normally you would simply disclose facts in a note.
Disclose a possible asset in a note, but be careful to avoid misleading implications. In practice, possible contingent gains are often not disclosed.
No recognition or disclosure.CONTINGENT GAINS