• Indicate for each of the statements whether it is T or F according to NZ IAS 12.

• If the statement is false, rewrite the statement to make it true. If the statement is true, you do NOT need to explain.

Information: At the beginning of the financial year, the opening balance of the allowance for doubtful debts was $40,000. During the year, the company recognised $70,000 as a doubtful debts expense. At year end, the closing balance of the allowance for doubtful debts is $35,000. For tax purposes, the doubtful debts expense is not deductible until the debtors are actually written off as bad.

Statement: Therefore, for tax purposes, the deductible amount for doubtful debts expense for this financial year is $70,000.