If I am using the Direct Write-Off method with a balance of A/R - $160,000.00 and am writing off $2400.00. My question is does the company expect to collect the full amount. I know with the Allowance method they have a net receivable which is a/r minus allowable and then the net they expect to collect. I am not sure if using the Direct Write-Off Method they expect to receive it.

MaggieMouse

Direct write-off method means write it off when it OCCURES. I guess when it occures means you decided you will never collect them, that's why you write it off.

delite

using the direct write-off methd is okay if the write-off is not customary. if writeoffs are inherent ito the business than reserves are apporpriate (for financial purposes).the purpose of having reserves is to anticapate some things going wrong over a period of time and write offs are over a well thought out peiod of time(reserves)Doing direct would distort financial picture (direct) as indicated above, a reserve will lessen the blow and not distort financial picture.