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Analysis of Bad Debts
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
Allowance for Doubtful Accounts
Apple records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of Apple's customers, current economic conditions and other factors that may affect the customers' abilities to pay.
Source: Apple Inc., Annual Report
Allowance for Doubtful Accounts Receivable
Source: Based on data from Apple Inc. Annual Reports
1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ = %
|Allowance as a percentage of accounts receivable, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||Apple Inc.'s allowance as a percentage of accounts receivable, gross declined from 2015 to 2016 and from 2016 to 2017.|