Nagamine & Mishima Accounting Office

Accounting practice since 1989

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Account Recievable

Account Receivable

If a specific customer’s Account Receivable is identified as uncollectible, it is written off by removing the amount from Account Receivable as bad debts expense. For Japan tax purpose, when is it recognized as uncollectible? In principle, 1 year after the latest payment from the debtor is the timing to write off as bad debt. At least 1 JPY needs to be recognized for Account Receivable as memorandum value.

Other cases such as when reorganization plan comes into place are timing to use the allowance method. Check with your accounting office to see what steps can be taken depending on the legal status of debtor. Provision Fund for Bad Dept has strict guidelines.

Please note that if you do not recognize bad debt at the year that is applicable under Japan tax code, you will not be able to go back in retrospect for tax purpose.

In case Account Receivable is in currency other than Japanese Yen, you may need to convert at year end. Be sure to confirm with your tax accountant on the requirement of yearend conversion.

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People are Talking

  • “From the early days of our company’s establishment, N & M have given us a fine service not just for monthly and annual accounting, payroll processing and tax filing, but for financial reporting to our head office. In addition, we greatly appreciate their detailed responses to the head office for any small query about reporting.

    While the reporting schedule of overseas head office is sometimes very tight because it is out of consideration of Japanese holidays and other local schedule. Despite such a hard schedule, N & M have provided the service in time and it is a great reassurance to us.

    As we can get a in-depth reply from their experienced staff even for a minor question, we can consult N & M about anything without hesitation. We have nothing to worry about daily accounting in general. N & M is a necessary partner for us to facilitate our business in Japan.”

    Mr. Hiroshi Ohtaka, Representative Director

    Bel Japon K.K.