An irrecoverable debts is written off as soon as it is identified. The receivable is removed from the trade receivables general ledger account, and an expense is charged to the statement of profit or loss. An irrecoverable debt can be written back if it is received at a later date.
An allowance is made in respect of receivables that are doubtful. The receivables remain in the books, but the trade receivables'' figure reported in the statement of financial position is reduced by the allowance. The increase or decrease in the allowance is charged or credited to the statement of profit or loss.