You grant a current account credit of USD 100,000. In 1998, changes in the economic situation lead to a credit risk amounting to USD 50,000. A fixed value adjustment of USD 50,000 is posted in 1998 as follows:
Fixed IVA amount before posting run |
50,000 |
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IVA posted before posting run |
0 |
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IVA on Receivables |
Write Off on Receivables |
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50,000 |
50,000 |
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Fixed IVA amount after posting run |
50,000 |
||||||
IVA posted after posting run |
50,000 |
Postings for loss on receivables depend on whether:
Loss on receivables is less than the posted IVA
Loss on receivables is greater than or equal to the posted IVA
In 1999, you need to write off receivables worth USD 30,000, which is less than the posted IVA amount of USD 50,000.
The system posts a payment item with transaction type 8080 (loss on value adjusted receivables) and updates the value for the fixed IVA as follows:
Fixed IVA amount before posting run |
50,000 |
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IVA posted before posting run |
50,000 |
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IVA on Receivables |
Clearing Payables/ Receivables Accounts |
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30,000 |
30,000 |
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Fixed IVA amount after posting run |
20,000 |
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IVA posted after posting run |
20,000 |
Outcome
The customer still owes USD 70,000. An individual value adjustment of USD 20,000 remains posted on the customer account.
In 1999, you need to write off receivables worth USD 80,000, which is more than the posted IVA amount of USD 50,000.
The system posts a payment item for the whole value adjustment with transaction type 8080 (loss on value adjusted receivables):
Fixed IVA amount before posting run |
50,000 |
||||||
IVA posted before posting run |
50,000 |
||||||
IVA on Receivables |
Clearing Payables/ Receivables Accounts |
||||||
50,000 |
50,000 |
||||||
Fixed IVA amount after posting run |
0 |
||||||
IVA posted after posting run |
0 |
The system posts another payment item for the remaining amount with transaction type 8070 (loss on receivables):
Fixed IVA amount before posting run |
0 |
||||||
IVA posted before posting run |
0 |
||||||
Write Off on Receivables |
Clearing Payables/ Receivables Accounts |
||||||
30,000 |
30,000 |
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Fixed IVA amount after posting run |
0 |
||||||
IVA posted after posting run |
0 |
Outcome
The customer still owes USD 20,000. The posted IVA amount changes to USD 0.