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Query Posted : 213
Query Replied : 211
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  • Treatment of Penalty
    by Chirag on Friday, August 16, 2019  at 10:25 PM

    A company has received from Rs 1 lacs to a contractor for Repairs & Maintenance work in Factory. Repairs & Maintenance A/c is debited in Books of A/c when bill was received from Contractor. At the time of Payment, Rs 20000 penalty was deducted by company due to wrong work done. Query- Entry for this penalty should be -- Contractor A/c Dr To Repairs & Maintenance OR ELSE it should be treated as Income in P& L A/c & entry should be -- Contractor A/c Dr To Income from penalty

  • Treatment of Exchange Loss on Fixed Assets
    by Chirag on Friday, August 16, 2019  at 10:05 PM

    Dear Sir, A company has purchased Stainless steel Plate for a Machine from a SELLER OF CHINA. This Plate is capitalised in Plant & Machinery under Fixed Assets. There is an Exchange Loss of Rs 60000 in this transaction. Query- Whether this loss should be debited to Fixed Assets A/c?? i.e. Entry should be -- Exchange loss Dr.60000 To Fixed Assets 60000 Pls clarify with reason sir.

  • Subsequent renewal of lease and Lease hold improvement
    by Rahul on Thursday, August 08, 2019  at 03:12 PM

    A ltd has into non-cancellable lease for 36 month on 1 July 16. Capitalised lease hold improvement (LI) which are depreciated over lease period. A Ltd renewed lease for 60 Month on 1 July 19 and entire period is non-cancellable. In Aug 2019, Company is finalising financials as at 31 March 19. So which period should be considered for depreciation i.e. original till June 2019 or revised up to 2024? If revised period then which amount should be considered for depreciation over revised lease terms?

  • Disposal of asset during construction
    by Naman on Wednesday, July 31, 2019  at 05:24 PM

    Company is installing shed to cover new factory building whose construction is going on. Whole shed was constructed and was made in Rs 60. However as the quality was not good, it was dismantled and scrap was sold for Rs 6. Again new shed was constructed for Rs 70.this was all done before capitalisation of building. Will cost of FA will be 70 and 54 will be loss on asset (revenue/capital). Or will cost be 124 (70+60-6) ?

  • Treatment of Customs Duty
    by Chirag on Saturday, July 27, 2019  at 04:44 PM

    Dear Sir, Customs Duty Paid on Import of Plant & Machinery should be capitalised to Machinery A/c or it should be charged to P&L A/c ?? 2) Customs duty paid on Import of Raw Materials should be shown by way of Separate A/c in P&L A/c named "Customs Duty" or else it should be added to Basic Value of Purchases of Raw Material A/c in P&L A/c ?? 3) Handling charges of CHA paid in relation to import of Machinery should be capitalised to Machinery A/c or else it should be charged to P&L A/c ??

  • Accounting issue
    by Vivek on Thursday, July 25, 2019  at 05:38 PM

    Dear Sir, Continuing just asked query-- At the time of Sale from Depot, it passes following entry Debtors A.c Dr. To Sales To Taxes And at month end , it passes SALES A.C DR. TAXES A.C DR. TO FACTORY A.c. Thereby transferring the sales made and taxes collected by Depot to Factory A.c. The factory in this respect passes Depot A.c Dr. To Sales To Taxes , In its books of Accounts Query-- Whether all the above accounting done is correct ??

  • Accounting issue
    by Vivek on Thursday, July 25, 2019  at 05:33 PM

    Dear Sir, Reframing earlier asked query-- A Factory sends Finished goods to Depot and treats such transfer of goods as STOCK TRANSFER. At the time of sending the goods,ONLY stock of Finished Goods of Factory GETS REDUCED. The Depot initially records the Receipt as Purchase Ac Dr. To Factory Ac. And then subsequently at MONTH END, IT REVERSES THIS ENTRY, THEREBY NULLIFYING THE PURCHASE A.c. & Factory A.c. Balance query in next post

  • Employee stock option
    by arun on Monday, July 15, 2019  at 01:11 PM

    dear sir company is starting employee stock option. i am reading AS15 employee benefit, guidance notes on employee stock option. is this correct way. or any other law available which i can refer. please guide me.

  • Accounting issue & AS-2
    by Vivek on Saturday, July 13, 2019  at 03:59 PM

    Dear Sir, A Factory is situated in outskirts of a city. The Sales Depot of the factory from where sale of goods is made is situated in the city. Query- How accounting should be done of goods sold to Sale depot by factory ?? 2) If Freight is not charged in the invoice by seller. Instead The Transporter issues Bill of Freight SEPARATELY to the Buyer. Query- Whether such SEPARATE ISSUE OF BILL OF FREIGHT by Transporter WILL FORM PART OF COST WHILE DOING VALUATION OF CLOSING STOCK ??

  • Accounting of schools
    by Chirag on Thursday, July 04, 2019  at 02:04 AM

    Dear Sir, With respect to query titled-- Accounting of schools by Chirag on Saturday, June 29, 2019 at 03:09 PM I want to ask that the 'Illustrations' part of AS 9 provides that fees charged for tuition service should be recognised over the period tuition is provided. This means that any Income From Fees received in F.Y. 18-19 for the period of 19-20 in Advance , MUST BE RECOGNISED AS ADVANCE FEES IN BALANCE SHEET IN 18-19. Do you agree sir ?? 2) Is this called as completed service method

  • Treatment of insurance charges at the time of purchasing asset
    by Vivek on Wednesday, July 03, 2019  at 01:47 AM

    Dear Sir, Insurance charges paid at the time of Purchasing Vehicle by a company in F.Y. 18-19 is Rs 64000. Query- Whether a) entire Rs 64000 should be CAPITALISED IN 18-19 to Vehicle a/c or b)Entry for prepaid insurance should be made in this respect and only the portion attributable to 18-19 should be capitalized ?? Pls clarify with reason. 2) If option (b) should be adopted,then we will pass following entry in 19-20-- Vehicle account Dr. To Prepaid Insurance Am i right??

  • Accounting of schools
    by Chirag on Saturday, June 29, 2019  at 03:09 PM

    We are Internal auditor of a school . Capital is contributed by a Educational Society .The statutory auditor is of the view that Expenses and Income should be recorded on Realisation Basis & not on Accrual Basis. They are of the view that as Income & Exp A/c & not P& L a/c is prepared and also the objective of school cannot be profit motive.. Due to this they have not allowed to make Entry for Prepaid Insurance , Entry for Provision expenses etc . Whether they are correct ??

  • Treatment of software purchased
    by Chirag on Saturday, June 29, 2019  at 02:57 PM

    Dear Sir, How to decide that whether Accounting Software purchased by the company for Rs 20000 during the year should be capitalized or it should be charged to P& L a/c ?? 2) Whether renewal of software expenses every year should be capitalized or or it should be charged to P& L a/c ?? Thanks sir..

  • Cost of asset
    by SACHIN on Saturday, May 11, 2019  at 05:29 PM

    The Company is purchasing the Car in the name of the Company. The part of Car's cost (Say 50%) is recovered from the employee who is going to use that car. On what amount the depreciation is to be charged? On the cost of the car (100%) or reduced cost (50%) Please guide

  • Provision Accounting
    by Chirag on Saturday, May 11, 2019  at 01:10 PM

    Dear Sir, Requesting you to pls help me in understanding the logic that why provision needs to be created in case of NPA in case of banking companies or in case of losses. ?? 2) What will be the effect of creation of provision in above case and what will be the advantage of creating it ?? Thanks a lot sir ..Regards....

  • AS-9
    by Chirag on Saturday, May 11, 2019  at 01:01 PM

    Dear Sir, If sale deed is prepared on 10.04.17. And agreement between customer & builder was done on 15.03.17. Cheque (as advance) of Rs 2 lacs was received on 15.03.17 which was encashed on 17.03.17. Balance money was received in Next F.Y. Total sale Consideration for the land was Rs 25 lacs . Query- What will be sale amount to be recognised in F.Y.17 -18 & 18-19 in the books of builder as per AS -7/ AS-9 principles ?? Thanks sir..

  • Interest on Loan
    by Chirag on Sunday, May 05, 2019  at 01:55 AM

    Dear Sir, If a company obtains Loan for purchase of Fixed Assets like Car, Building , Machine etc , then whether Interest paid on the loan will be capitalised or not ?? 2) If yes, then till which period the company will capitalise the interest cost ?? Thanks 3) If company has given Advance for Fixed Assets, & the Assets will be purchased in next month, then whether in this interest will be capitalised ??

  • Depreciation on Investment property
    by Chirag on Tuesday, April 02, 2019  at 02:44 AM

    Dear Sir, If a company is having a property (Land/ Building) and it is held by the company for investment purpose, then whether depreciation should be charged on such property or not ?? 2) Whether above property should be shown as Investments or Fixed Assets ?? 3) If any property is given on rent by a company, then whether Depreciation should be charged on such property ?? Pls provide guidance in accordance with AS & Ind-AS requirements ??

  • CARO applicability
    by Chirag on Thursday, March 14, 2019  at 08:11 PM

    Sir,In case of applicability provisions relating to CARO 2016,in case of Pvt Limited Company,The Threshold of 1 crore and 10 crores in case of Aggregate of Paid Up Capital and Reserves & Surplus AND TOTAL REVENUE respectively should be checked as on 31st March i.e. If M/S XYZ, Auditor of PQR Pvt Ltd. wants to conduct audit on 25.03.19,then above applicability will be checked on 31.03.19. Right? 2)In case of Borrowings,the threshold is Rs 1 crores AT ANY POINT OF TIME DURING FY 18-19.Am i righ

  • Revenue recognition For Real Estate
    by RAJESH on Wednesday, March 13, 2019  at 09:17 PM

    which guidance note of ICAI is applicable for revenue recognition for real estate sector.Both who are covered by IND AS and which are not covered.Whether Profit has to be booked on making of sale agreement or the year in which sale deed is executed in favour of purchaser.Generally Sale agreement is made during construction period and payment is received in installments through bank loan.

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