By Dennesa
Learning Objectives: 
To help students understand how the changes in the calculation of the ending allowance for impairment of trade receivables when compared to the beginning allowance for impairment of trade receivables, lead to an impairment loss on trade receivables or the reversal of impairment loss on trade receivables.

 

 

Interactive Prompt: 
A section to show a $10,000 beginning allowance for impairment of trade receivables balance on 1 Jan 20X5, a next section with two drop down boxes - first drop down box to select different ending trade receivables balance of $120,000, $140,000, $160,000 and $180,000, another drop-down box to select different percentages of allowance for impairment of trade receivables (4%, 6%, 8% 10%) and second box that shows the results of the ending allowance for impairment of trade receivables based on the formula = percentage (%) of ending allowance for impairment of trade receivables x Ending trade receivables balance. This is followed by a third section to show the if it leads to an impairment loss on trade receivables or reversal on impairment loss on trade receivables based on the formula “Impairment loss on trade receivables = Ending allowance for impairment of trade receivables – beginning allowance for impairment of trade receivables”. If the difference is positive, it should indicate that it is an impairment loss on trade receivables, if the difference is negative amount, it should indicate that it is a reversal of impairment loss on trade receivables.