All receivables that are expected to be realized in cash within a year are reported in the Current assets section of the balance sheet. Current assets are normally reported in the order of their liquidity, beginning with cash and cash equivalents.
The balance sheet presentation for receivables for Mornin’ Joe is shown below.
In Mornin’ Joe’s financial statements, the allowance for doubtful accounts is subtracted from accounts receivable. Some companies report receivables at their net realizable value with a note showing the amount of the allowance.
Other disclosures related to receivables are reported either on the face of the financial statements or in the financial statement notes. Such disclosures include the market (fair) value of the receivables. In addition, if unusual credit risks exist within the receivables, the nature of the risks are disclosed. For example, if the majority of the receivables are due from one customer or are due from customers located in one area of the country or one industry, these facts are disclosed.[1]
Source: Warren Carl S., Reeve James M., Duchac Jonathan (2013), Corporate Financial Accounting, South-Western College Pub; 12th edition.
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