When the collectability of an amount that has been recorded as revenue becomes uncertain,the appropriate accounting treatment is to:
A) Recognise as an expense the amount in respect of which recovery has ceased to be probable.
B) Calculate the discounted present value of the amount expected to be received and adjust the recorded revenue accordingly.
C) Adjust the amount of revenue originally recognised.
D) Make no adjustment as the amount and timing of the uncollectible amount is uncertain.
E) None of the given answers.

Question

Quizplus · Accepted Answer

When collectability becomes uncertain, the amount that is no longer probable to be recovered should be recognized as an expense, reflecting the loss in value.

When the Collectability of an Amount That Has Been Recorded