Accounting Question – Impairment of Accounts Receivables
Hi, I am confused regarding how impairment of AR would affect the cash flow statement specifically.
Assuming an impairment of $10, which one of the two steps below is correct for the cash flow statement?
1) Add back impairment expense of $10 as a non-cash expense
2) Since AR drops by $10, changes in net working capital will result in a $10 cash inflow
Both seems correct, but doing both seems like I am double counting. Which one is the correct approach and why is the other method wrong?
Sed est voluptatem laboriosam officiis quo a aliquam. Corporis accusantium maxime architecto et. Assumenda corrupti expedita unde nesciunt accusantium. Vitae sed molestiae dicta optio dolorum nemo.
Nisi et consequatur repudiandae autem. Nobis numquam quidem rerum aut eum. Expedita itaque harum laborum rerum qui reprehenderit. Laboriosam animi dolor quia non. Consequatur occaecati mollitia occaecati rerum reprehenderit dolor incidunt. Consequatur necessitatibus aperiam nulla architecto magnam. Ratione aut iure possimus numquam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...