Inventory

Inventory

Inventory means goods and materials that are held for the purpose of sale in the normal course of business or used in producing goods or services for sale. The types of inventory normally held depend on the characteristics of the business.

Other receivables

Unbilled revenue

Unbilled gas and electricity revenue is not collectible until such time as customers’ meters are read and bills rendered.

Amounts owing by associates and jointly controlled entities

This refers to the amounts owing by ActewAGL Retail Partnership and Greater Energy Alliance Corporation Pty Limited.

Ageing of accounts receivables method

Ageing of accounts receivables method

Ageing of accounts receivables method relies on the fact that, as the accounts receivable become older and more overdue, it is more likely that they will prove to be uncollectable.

Amortized cost

Amortized cost

Amortized cost is defined as part of the cost of an asset which is written off as amortization or depreciation in the firm's account books, and represents accumulated amortization or depreciation to date.

Methods for measuring the net account receivables

There are two methods for measuring the net value of account receivables. The first method is the allowance method, which establishes a contra-asset account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable. The amount of the bad debt provision can be computed in two ways, either by reviewing each individual debt and deciding whether it is doubtful (a specific provision); or by providing for a fixed percentage of total debtors (a general provision). The change in the bad debt provision from year to year is posted to the bad debt expense account in the income statement.

Another method is the direct write-off method, which is simpler than previous method since it allows for one simple entry to reduce accounts receivable to its net realizable value. The entry would include debiting a bad debt expense account and crediting the respective account receivable in the sales ledger. The two methods are not mutually exclusive. Some businesses will have a provision for doubtful debts, writing off specific debts known to be bad.

Allowance for doubtful debts

Allowance for doubtful debts

An allowance for doubtful debts is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows.

Trade receivables

Trade receivables 

Trade receivables can be defined as in exchange for goods or services that have been delivered or used, but not yet paid for, also reported as accounts receivable. Receivables usually indicate in the form of operating lines of credit and are usually due within a relatively short time period.