To assess the “probability” of collection, an entity must consider the counterparty’s ability and intention to pay as amounts come due. Intent to pay must consider all relevant factors such as historical collection experience and collateral held. The probability of collection should be assessed after considering any price concessions expected to be provided. The “probable” threshold creates a difference between U.S. GAAP and IFRS as it is generally accepted to mean a greater than 75% likelihood in U.S. GAAP and more likely than not (i.e., greater than 50% likelihood) in IFRS.
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