Chapter 4: Accounts Receivables

Accounts Receivables
 Are open accounts arising from the sale of merchandise or services in the ordinary course of business
and not supported by promissory notes.
Measurements
1. Initial Measurement
 PFRS 9, paragraph 5.1.1: shall be recognized initially at fair value plus transaction costs that are
directly attributable to the acquisition.
2. Subsequent Measurement
 PFRS 9, Paragraph 5.2.1: accounts receivable shall be measured at amortized cost or the net realizable
value of accounts receivable.

Net Realizable Value

 Accounts receivable shall be reduced from related expenses

Trade Receivables
 Claims arising from sale of merchandise or services in the ordinary course of business.
◦ Amount collectible from sale of goods or services on account (accounts receivable), or as
evidenced by a note of promise to pay (notes receivable).
◦ Receivables arising from other income such as interest, commissions, and rentals (accrued
revenue).
Nontrade Receivables
 Claims arising from sources other than the sale of merchandise or services in the ordinary course of
business.
◦ Loans and advances to company officers and employees, and all other claims.
Classification
 PAS 1, Presentation of Financial Statements, Paragraph 66: An entity shall classify an asset as
current when the entity expects to realize the asset or intends to sell or consume it in the entity’s normal
operating cycle, or when the entity expects to realize the asset within twelve months after the reporting
period.
1. Current Asset
 Trade receivables which are expected to be realized in cash within the normal operating cycle or one year,
whichever is longer.
 Non Trade receivables which are expected to be realized in cash within one year, the length of the
operating cycle notwithstanding.
2. Noncurrent Asset
 Non trade receivables collectible beyond one year.