28 February 2011
FDR interest is taxable and should be accounted on accrual basis. It can be calculated on the basis of rate given in the FD receipt or you can take an annual accrual certificate from your bank. It should be accounted for as follows:
Interest Accrued(FDR) a/c Dr Interest earned on FDR Cr
Interest Accrued(FDR) will be a Balance Sheet item, whereas Interest earned on FDR will be a Income side item of P&L a/c.
When you actually receive the interest from bank, then it should be credited to Interest Accrued(FDR) a/c.
28 February 2011
ok now take an example as the following : an amount of rs. 90000 invested as FDR @ 9.75 % for 555 days as on 15-02-2011. now tell me wat shud be the treatment as on 31-03-2011
28 February 2011
Calculate Interest of 1.5 month @9.75% p.a. on Rs. 90000/- which can be calculated as under 90000*.0975*1.5/12= 1097 Show as under in the Balance Sheet -
FDR.................... 90000 Accd Interest on FDR...1097
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