Irrecoverable debt
An irrecoverable debt is a receivable determined uncollectible and removed from the ledger. The write-off removes the individual customer's balance once recovery is no longer reasonably expected. If an existing allowance covered the debt, the accounting effect depends on how the allowance was recorded. A later recovery must be recorded when it arises. Writing off reduces the customer's recorded debt; it does not prevent later recovery action.
Worked example
Write off 200 by debiting irrecoverable debt expense and crediting trade receivables.
Common mistake
A possible future default is addressed by an allowance; a write-off is not simply an allowance estimate.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Bad debt, Irrecoverable (or 'bad') debt