Teta SA applies a provision matrix to its trade receivables without a significant financing component. The loss rates by ageing bucket, established from history and adjusted for forward-looking information, are given by the case. Balances and rates: not yet due 600,000 at 0.5 %; 1 to 30 days 200,000 at 2 %; 31 to 90 days 100,000 at 10 %; over 90 days 50,000 at 40 %. Calculate the loss allowance of the 31 to 90 days bucket, then the total loss allowance.
- Receivables not yet due
- 600,000
- Loss rate, not yet due
- 0.5 %
- Receivables 1 to 30 days past due
- 200,000
- Loss rate, 1 to 30 days
- 2 %
- Receivables 31 to 90 days past due
- 100,000
- Loss rate, 31 to 90 days
- 10 %
- Receivables more than 90 days past due
- 50,000
- Loss rate, over 90 days
- 40 %