Reference no: EM132636514

Question - LawnCo is a lawn service company which provides grounds and maintenance services to a range of corporate customers. Customers are expected to pay on the first of each month, in advance of receiving services. One of LawnCo's corporate customers is an eldercare facility whose grounds the company has maintained for many years. The customer has not paid for the last three months of service (from October - December 2019); nevertheless, to maintain a positive relationship, LawnCo continued to provide mowing and weed control services to the eldercare facility during that time. LawnCo ceased providing services in January 2020 and found out in that same month that the eldercare facility filed for bankruptcy in September. LawnCo now believes that collection of the missed payments is extremely unlikely.

LawnCo has already issued financial statements to lenders (for the period ending 12/31/2019) which reflected revenue and a corresponding account receivable related to this customer of $10,000 per month for services provided. Those financial statements also reflected the company's standard allowance (reserve) amount on receivables, of 4% of sales. In total, LawnCo's average monthly sales amount to $500,000.

Required -

1) Research US accounting standards to determine the proper treatment for the service receivable/customer bankruptcy on LawnCo's financial statements, assuming it is headquartered in the United States.

2) Research international accounting standards to determine the proper treatment for LawnCo's transactions, assuming it is headquartered in France.