STUDY ON THE ACCOUNTING OF ADJUSTMENTS FOR RECEIVABLES DEPRECIATION IN OPERATIONS WITH CLIENTS

Abstract

The present work approaches an important topic for credit institutions: limiting the credit risk and determining the prudential value adjustments for the depreciation of client credits, and their reflection in the accounting statements. The Chart of Accounts applicable to credit institutions includes class-two accounts Operations with clients and expenses and revenues accounts, which help record the adjustments for receivables depreciation in operations with clients. To constitute, diminish or annul depreciations, credit institutions have the obligation to assure the classification of their credits based on classification categories according to three criteria: financial performance, debt service and initiation of juridical procedures. By the present study, we present the way the credit portfolio is structured according to the criteria mentioned and the reflection in accounting of the prudential adjustments of value. The article ends with the authors’ conclusions regarding the specificity of the way of classification of the credits according to risk categories in agreement to the evolution of the class determination criteria.

Keywords

• credit institutions
• clients
• depreciation adjustment
• credit risk
• financial performance
• debt service
• classification criteria
• standard
• under obsevation
• substandard
• doubtful
• loss