Provision for bad debts

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devendar (Querist)
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16 May 2012 Hi Friends. I have a doubt and need your help.

On what basis Companies estimate Provision for Bad Debts.Is it based on past recovery or any other criteria.
plz get my doubt clarified.

BALAJI R

BALAJI R (Expert)
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17 May 2012 Dear Devendar,

Provision for bad debt is created on the following basis:
1. Debts which have been due for more than 3 years(because of the applicability of law of limitation)
2. All disputed debts.
3. Debts against which court cases are pending.

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