USA Recoveries on Bad Debt


NJR

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Oct 7, 2016
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Hi there-

Was wondering if anyone has encountered this before. We have loans to outstanding businesses in which we eventually have to write off. We then contract a legal firm to help us collect on anything we may be able to collect, however anything they collect they take a fee. For example the legal firm may collect $100 but take $20 as a commission and send us the $80.

Weve been accounting for this as a $80 recovery, however Im wondering if this should in fact be a $100 recovery and a $20 expense. Ive checked ASC 310-10 and found nothing.

Any suggestions?

Thanks!
 
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kirby

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If you record both parts you can use the acctg system to run a report that will tell you the cost of collecton. In your example = 20/100 = 20%, which is useful info. If you record net $80, you will not have this. Not a big acctg issue as far as formal acctg statements.
 

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