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Microsoft Excel LibreOffice Calc


Analysis of Bad Debts

Difficulty: Advanced

Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company's gross accounts receivable.The relationship between the allowance and the balance in receivables should be relatively constant unless there is a change in the economy overall or a change in customer base.


Receivables Accounting Policy

Accounts Receivable, Net and Other

Included in "Accounts receivable, net and other" on Amazon.com's consolidated balance sheets are amounts primarily related to customers, sellers, and vendors. As of December 31, 2016 and 2017, customer receivables, net, were $3.9 billion and $6.4 billion, seller receivables, net, were $661 million and $692 million, and vendor receivables, net, were $2.0 billion and $2.6 billion. Seller receivables are amounts due from sellers related to Amazon.com's seller lending program, which provides funding to sellers primarily to procure inventory.

Amazon.com estimates losses on receivables based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for doubtful accounts was $189 million, $237 million, and $348 million as of December 31, 2015, 2016, and 2017. Additions to the allowance were $289 million, $451 million, and $626 million, and deductions to the allowance were $290 million, $403 million, and $515 million in 2015, 2016, and 2017. The allowance for loan losses related to Amazon.com's seller receivables was not material as of December 31, 2016 and 2017.

Source: 10-K (filing date: 2018-02-02).


Allowance for Doubtful Accounts Receivable

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Allowance for doubtful accounts hidden hidden hidden hidden hidden
Accounts receivable, gross hidden hidden hidden hidden hidden
Ratio
Allowance as a percentage of accounts receivable, gross1 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29), 10-K (filing date: 2015-01-30), 10-K (filing date: 2014-01-31).

2017 Calculations

1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Amazon.com Inc.'s allowance as a percentage of accounts receivable, gross declined from 2015 to 2016 and from 2016 to 2017.