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The allowance is a topic of much regulatory scrutiny, and a review of the ALLL methodology is a significant portion of a financial institution's safety and soundness exam because it is important for federal bank examiners to ensure that an institution has a sufficient amount of capital in the allowance reserve.
In finance, bad debt, occasionally called uncollectible accounts expense, is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going into liquidation or insolvency.
Examples are accumulated depreciation against equipment, and allowance for bad debts (also known as allowance for doubtful accounts) against accounts receivable. [33] United States GAAP utilizes the term contra for specific accounts only and does not recognize the second half of a transaction as a contra, thus the term is restricted to accounts ...
Industry leader Apple, for example, has a very good ratio of 0.314, but Tesla has hardly any debt at all compared with its assets. Again, this doesn’t make one a better investment than the other ...
A chart of accounts (COA) is a list of financial accounts and reference numbers, grouped into categories, such as assets, liabilities, equity, revenue and expenses, and used for recording transactions in the organization's general ledger. Accounts may be associated with an identifier (account number) and a caption or header and are coded by ...
Our allowance for credit losses as a percent of loan receivables was 10.44%, which decreased approximately 35 basis points from the 10.79% in the third quarter.
A third classification of adjusting entry occurs where the exact amount of an expense cannot easily be determined. The depreciation of fixed assets, for example, is an expense which has to be estimated. The entry for bad debt expense can also be classified as an estimate.
Deferred tax assets generally arise where tax relief is provided after an expense is deducted for accounting purposes: a company may accrue an accounting expense in relation to a provision such as bad debts, but tax relief may not be obtained until the provision is utilized