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Hi Deat Tutor, as we know that we recognize ID in the p/l as an expense. When we calculate cash flow from operating activities we add back such as depreciation, interest expense, loss on foreign exchange and deduct profit on disposal, investment income, gain on foreign exchange. Why do not we add back ID?
It is because an irrecoverable debt means that less cash has been received and so is already accounted for in the change in receivables when calculating the cash flow from operating activities.
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