Debtor-in-Possession Accounting

Debtor-in-Possession (DIP) accounting is used by companies that are undergoing bankruptcy but still operate their business. In this context, the company remains in control of its assets and finances while restructuring to pay off creditors. DIP accounting helps track income and expenses during this period, ensuring transparency and compliance with bankruptcy laws. It often involves separate tracking of pre-existing debts and the ongoing operations to distinguish between assets before and during bankruptcy, allowing stakeholders to understand the financial health of the business as it attempts to recover.