Expert: Arthur Naman - 5/15/2009

Question
Hello,
We are sorry, but Mike Wellman wasn't able to answer your question:

I would like to know if there is a way to expense lost time -- time spent rendering a service which doesn't result in compensation. And I'm referring to some type of expense beyond the income offset of 'bad debt' or 'uncollectable receivables'. As an example; a therapist gives the service of a one hour session to a client and ultimately doesn't get paid due to insurance maximums, etc. How do I claim that loss of time that could have been spent with another client for which I would have been paid. My only thought has been 'other expense' except that I was taught that was to be used for 'non-operating' expenses only AND what would the offsetting account be??? Please help!

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Answer
No, there is no deduction for lost time. Income and expenses are based on dollars, money. If one does not get paid, there is nothing to write off in a service business other than as you suggest an offset to income or as an uncollected receivable.

It's a little different in a business that sells goods because there is a money cost to the production of the items for sale. Thus if payment is not received, there is a dollar loss. Not so with a service business as there is no defined dollar cost to lost time or for that matter to time given away as goodwill.

Please ask a followup if this is not clear.