In general, if a company makes an incorrectly low estimate of bad debt expenses in 2016, then in later years it will have to reflect higher bad debt expenses than if it had made an accurate estimate in 2016.

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This is because if the company underestimated its bad debt expenses in 2016, it would have recognized less expense in its financial statements for that year. However, in later years, when the company realizes that it has more bad debts than it estimated, it will need to recognize the additional expenses in its financial statements for those years. This will result in a higher total expense for bad debts over time than if the company had made an accurate estimate in 2016.

In General, If a Company Makes an Incorrectly Low Estimate