Form Assignment Accounts Receivable With Credit Card In Contra Costa
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FAQ
The allowance for doubtful accounts – often called a “bad debt reserve” – would be considered a contra asset since it causes the accounts receivable (A/R) balance to decline.
Examples of offset accounts are the allowance for bad debts (paired with the accounts receivable account), the reserve for obsolete inventory (paired with the inventory account), and accumulated depreciation (paired with several fixed asset accounts).
Normal asset accounts have a debit balance, while contra asset accounts are in a credit balance. Therefore, a contra asset can be regarded as a negative asset account. Offsetting the asset account with its respective contra asset account shows the net balance of that asset.
Contra accounts are reported on the same financial statement as the associated account. For example, a contra account to accounts receivable, often called allowance for doubtful accounts, is a contra asset account. This type of account could be called the allowance for doubtful accounts or a bad debt reserve.
Assignment in the context of a receivable means the transfer of rights related to it to another person or entity. For this purpose, an appropriate contract is usually concluded (although this is not a necessary condition).
Assignment of receivables would mean sale of the lease rentals, not the asset. In that case, the leased asset still remains the property of the assignor – that is, the assignor has retained the residual interest in the asset. However, it would be different if the lessor sells the asset that has been leased out.
A receivable assignment agreement is an agreement by which a creditor – the “assignor” – assigns to another person – the “assignee” – a receivable it holds against a third person – the “assigned debtor”. The assigned debtor is not a party to the assignment agreement.
