AboutArthur Naman Expertise General accounting and bookkeeping questions. How to do monthly bookkeeping, how to prepare financial reports. How to reconcile accounts.
I cannot answer questions pertaining to pension or retirement planning.
This is not a forum to have homework answered. Please do your own homework.
Experience 30 years' experience doing tax and accounting work
Education/Credentials MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA
Question Let's say company A receives some cash from a settlement with company B. If Company A believes that Company B will file for bankruptcy within the next 90 days (within the voidable preference period in other words), must Company A take a reserve against the cash received? Or could/should it? Thank you.
Answer Your question is a little confusing. If you have received the cash settlement, then what difference does it make if company B goes into bankruptcy; you've been paid.
So, assuming there is unpaid cash due to your company A, at some point the receivable should be written off. The question is when.
The answer is when a decision is made that the settlement will more likely than not be paid. That may simply be when company B goes into bankruptcy unless you have information to the contrary.
If a decision is made to write off the receivable, then I do not think a "reserve" is needed.
