Possibility to make impairment allowances of bad debt is applied in cases where there is no possibility uncollectible receivables shot once in the cost of revenue. Such situation exists when the creditor does not have documentation specified in the income tax and corporation tax law on personal income, i.e. provision for uncollectible, issued by the competent authority of enforcement proceedings, court order issued in the bankruptcy proceeding or as a result of the bankruptcy petition, or if the protocol stating that the anticipated costs of proceedings and execution related to the investigation of claims would be equal to or greater than the amount is not possible due to the large amount of debt.
Referring to the issues specified in the Accounting Act, it should be remembered that bad debts should not be recognized in the balance sheet. They are written off when considering the degree of probabilities payment in the books before they were closed. With regard to receivables, of which the debtor is in arrears and according to the assessment of the financial position of the debtor's repayment of the contractual amount receivable is not probable - impairment is made to the amount of accumulated debt repayment protection.
First of all, it should be remembered that Prima facie evidence of non-recovery is a surrogate measure of proof, and therefore just means probability of giving. Prima facie evidence of default is, therefore, an indication of circumstances sufficient to adopt conviction about the probability of the fact, however, is not the fact that such evidence does absolutely sure, making the possibility of impairment allowances more accessible to creditors than a single credit in bad debt expenses.
Allowances for doubtful accounts are charged to other operating expenses or financial costs. In the case of write-offs, legislature finds that the costs may be tax deductible write-downs as defined in the Accounting Act, in the part that was previously included in the income, the non-performance was probable on the basis of art. 16 p. 2a item 1 of the Law on Corporate Income Tax law or art. 23 p. 3 of the Law on Individuals Income Tax such as the debtor died, was removed from the register of economic activities, went into liquidation or is announced bankrupt including liquidation of assets, or insolvency proceedings have been initiated to an arrangement under the provisions of bankruptcy law or at the request of the debtor's bankruptcy proceedings have been initiated under the provisions of the financial restructuring of enterprises and banks, or the claim has been confirmed by a final judgment of the court and directed the enforcement proceedings or claim is disputed by the debtor through judicial action. It is worth noting that the list of reasons substantiating the irrecoverability of debts is open so that you can demonstrate the non-recovery in other ways, such as paying attention to his poor financial condition.
It should be noted that the mere taxpayer knowledge of the debtor's financial situation will not be sufficient, the description of such situation should be recorded in the form of studies, protocols, declarations, or other types of documents that will be a substantiation of the debtor’s situation, indicating the inability to recover claims. Substantiation of debt recovery should be based on evidence held by the creditor, which became the basis for the preparation of the documents referred to above mentioned. The legislature does not include documents that could be the basis for the adoption of such a position of the creditor, therefore there is no restriction on the evidence that can be used. Such a document could be, for example, a decision to discontinue enforcement as ineffective because of the thorough analysis or the debtor's financial statements.
In determining impairment losses should be borne in mind the provisions of art. 35b p. 1 of the Law on Accounting, which indicate how and to what extent you can make a copy of. According to the judgment of the Regional Administrative Court in Wrocław of 05 March 2009., ref. act I SA / Wr 847/08 One of the conditions for the recognition of the cost of the tax allowance for impairment loss is made ??in accordance with the accounting regulations. Failure in that respect makes it impossible to pass the deductible costs of claims, even if the company has met the other two conditions resulting from art. 16 p. 1 i. 26a) of the Income Tax Act corporation, i.e. recognized as revenue debts and substantiated the irrecoverability of the debt.
It should be noted that the cost of the tax can only be write-downs of receivables, where the claim was previously included in the income the same write-down will not be a charge to advance on future deliveries of goods and services, unpaid interest of debts, not received contractual penalty, not repaid by the debtor's legal costs, etc.