Difference between “write down of bad debt” & “provisions for bad debt”?
My understand is that a bank can write off bad debt (the bad debt has already ofccured & if a bank allows “provision for bad debt” ( then this is just a provision and may not materialise. Am i correect?
So, what does this mean “Writedowns on investments hit by the crisis in the US sub-prime mortgage market rose to £2.5bn from an original forecast of £1.25bn. ”
1. is it a bad debt or just provision?
2. If a provision, and the investments bounce back up, how can they bring that back and show on income statement and balance sheet?
arrr….i understand now. So, its a write down of investment value not related to debt.
But what if in the future, the assets of these investments go back up. How is this brought back into the income statement and balance sheet?
but according to telegraphs its says it was a provision
“He further underscored his confidence in RBS’s prospects and his commitment to shareholders by raising the dividend 10pc, after doubling the bank’s provisions against the credit crunch to £2.5bn”