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Bad debt recovered
My question is , bad debts are recorded when your debtor is unable to pay u.. but if he pays you afterwards you record it as bad debt recovered.. what if bad debt recovered after many years? I means is there any time limit after which that amount will become immaterail or you will still record it as a bad debt recovered even after many many years?
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In the interests of accuracy you should record it as a bad debt recovered, however there could be situations where the amount is immaterial and could be recorded as sundry income. Ie; a debt of $10 in the 70's is of very little value today. Your organisation should develop a policy on dealing with such transactions.
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