 a bad debt is an amount owed by a debtor that is unlikely to be paid due, for example, to a company going into liquidation."bad debt": oxford dictionary of accounting, 4th ed., isbn 9780199563050 there are various technical definitions of what constitutes a bad debt, depending on accounting conventions, regulatory treatment and the institution provisioning. in the usa, bank loans with more than ninety days' arrears become "problem loans"."bad debt": oxford handbook of international financial terms,isbn 9780198294818 accounting sources advise that the full amount of a bad debt be written off to the profit and loss account or a provision for bad debts as soon as it is foreseen. ==doubtful debt== doubtful debts are those debts which a business or individual is unlikely to be able to collect. the reasons for potential non-payment can include disputes over supply, delivery, the condition of item or the appearance of financial stress within a customer's operations. when such a dispute occurs it is prudent to add this debt or portion thereof to the doubtful debt reserve. this is done to avoid over-stating the assets of the business as trade debtors are reported net of doubtful debt. when there is no longer any doubt that a debt is uncollectible, the debt becomes bad. an example of a debt becoming uncollectible would be:- once final payments have been made from the liquidation of a customer's limited liability company, no further action can be taken. ==doubtful debt reserve== also known as a bad debt reserve, this is a contra account listed within the current asset section of the balance sheet. the doubtful debt reserve holds a sum of money to allow a reduction in the accounts receivable ledger due to non-collection of debts. this can also be referred to as an allowance for bad debts. once a doubtful debt becomes uncollectable, the amount will be written off. ==accounting practice in different countries== ===united states===  allowance for bad debts are amounts expected to be uncollected, but still with possibilities of being collected (when there is no other possibility for them to be collected, they are considered as uncollectible accounts). for example, if gross receivables are us$100,000 and the amount that is expected to remain uncollected is $5,000, net current asset section of balance sheet will be: {| |- | gross accounts receivable | style="text-align:right;"| $100,000 |- | less: allowance for bad debts | style="text-align:rig
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