In prior periods, Globo Gym Services used the direct write off method to account for bad debts. Globo Gym Services historically had a stable client base and management did not continue to service clients who did not pay invoices due. Complete the following: (a) Describe the direct write off method of accounting for bad debts. (b) Explain with reference to one qualitative characteristic why the direct write off method was deemed appropriate prior to the COVID-19 pandemic and why it is unlikely to be appropriate since the pandemic. Clearly label each part of your answer related to parts a and b above.
In prior periods, Globo Gym Services used the direct write off method to account for bad debts. Globo Gym Services historically had a stable client base and management did not continue to service clients who did not pay invoices due. Complete the following: (a) Describe the direct write off method of accounting for bad debts. (b) Explain with reference to one qualitative characteristic why the direct write off method was deemed appropriate prior to the COVID-19 pandemic and why it is unlikely to be appropriate since the pandemic. Clearly label each part of your answer related to parts a and b above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In prior periods, Globo Gym Services used the direct write off method to
account for bad debts. Globo Gym Services historically had a stable client
base and management did not continue to service clients who did not pay
invoices due. Complete the following:
(a) Describe the direct write off method of accounting for bad debts.
(b) Explain with reference to one qualitative characteristic why the direct
write off method was deemed appropriate prior to the COVID-19
pandemic and why it is unlikely to be appropriate since the pandemic.
Clearly label each part of your answer related to parts a and b above.
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