Irrecoverable debts are charged as an expense in sopl. So it has reduced the profit figure. Then why it is not added back as a non cash expense. Can u plz explain...
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Treatment of irre. Debts in indirect method of cashflow
3y ago#1It is because when we adjust the profit figure for changes in working capital, then for receivables we are taking the receivables figures in the SOFP which are after removing any irrecoverable debts. So they are effectively accounted in that adjustment :-)
Thank u so much. It's clear now
3y ago#3You are welcome :-)
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