Under the new standards, accounts receivable fall under financial assets. Therefore, for all enterprises, accounts receivable should be accounted for in accordance with the relevant provisions of Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
For all enterprises, the provision for bad debts on receivables should also be calculated in accordance with the requirements of Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
The application guide of Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments stipulates the following regarding the provision for bad debts on accounts receivable:
For individually significant amounts of accounts receivable, an impairment test should be conducted separately. If there is objective evidence indicating that it has been impaired, the impairment loss should be recognized based on the difference between the present value of its future cash flows and its carrying amount, and a provision for bad debts should be made accordingly.