Legal Definitions - capital recovery

Definition: Capital recovery refers to the process of collecting bad debt that has been previously written off against the allowance for doubtful accounts.

Example: Let's say a company has a customer who owes them $1,000 but has not made any payments in over a year. The company decides to write off this debt as a loss and deducts it from their allowance for doubtful accounts. However, a few months later, the customer starts making payments again and eventually pays off the entire debt. This process of collecting the previously written off debt is known as capital recovery.

Explanation: Capital recovery is the process of collecting bad debt that was previously written off. In the example above, the company wrote off the debt as a loss, but later on, the customer started making payments again, and the company was able to recover the debt. This is an example of capital recovery.