Assume you are an analyst for Big Bank and you are putting together financial information on two clothing manufacturers, Lava Fashions Inc. and Flow Designs Inc., for your boss, to help her monitor Big Bank's loans with those two companies. Lava Fashions is a public company that follows IFRS and Flow Designs is a private company that follows ASPE.
One of the most significant assets for both companies is the accounts receivable from retailer customers. You know that your boss will be interested in knowing both the receivables' net realizable value and their exposure to credit risk (the risk that some of the customers won't ultimately pay for the goods they purchased).
You look at the financial statements and find that the information provided is considerably different for each company.
Lava Fashions reports the following information related to its receivables:

The aging of gross trade receivables at the end of each year was as follows:

Lava is exposed to normal credit risk with respect to its accounts receivable. It has provided for potential credit losses with an allowance for doubtful accounts. It reduces the potential for such losses because it evaluates a potential customer's creditworthiness before extending credit. Flow Designs reports the following information related to its receivables:

Flow provides credit to its customers in the normal course of its operations. It continually conducts credit checks on its customers and has provided for potential credit losses with an allowance for doubtful accounts although it has not disclosed this information in the notes to its financial statements.
Instructions
(a) Which company's financial statement note provides more useful information about the trade receivables? Why?
(b) Why do you think Lava Fashions provides more information on its receivables than Flow Designs?
(c) What additional information do you think Big Bank would want in order to assess the credit risk in trade receivables for Lava Fashions and Flow Designs?

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LAVA FASHIONS INC. Notes to the Flnanclal Statements December 31 (in thousands) Note 14: Trade Recelvables Trade recetvables Less: Net realizable value 2015 $1,854 (135) 1,/19 2014 S1,917 (124) $1,793 allowance for doubtful accounts (S In thousands) 2015 2014 Past due 0-30 days Past due 31-60 days Past due 61-90 days Past due 91-180 days Past due 180 days Balance at December 31 $1,322 183 170 50 62 67 $1,854 $1,363 192 167 61 70 64 $1,917 FLOW DESIGNS INC. Statement of Flnanclal Positlon (partial) December 31 (In thousands) 2015 2014 Current assets Trade recetvables, net S1,720 $2,053