Trade Debtors
Trade debtors are recognised at the invoiced amount and subsequently measured at amortised cost, less any provision for impairment. Where there is objective evidence that a debt may not be recoverable, it is written down to its recoverable amount through a charge to the income statement.
Impairment of Trade Debtors
A provision for impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due under the original terms of the invoice. Indicators of impairment include known insolvency or significant financial difficulties of the debtor, failure to make payment after reminders, or other objective evidence of potential non-payment. Individual trade debtor balances are reviewed on a case-by-case basis.
Debts which are considered irrecoverable are written off against the provision or directly to the income statement in the period they are identified.