Accounting for treasury bills
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 October 2012
Bank purchases Government Treasury Bill having maturity of say 91 Days. The Purchase Price is say Rs. 99.50 and upon maturity the Bank will receive Rs. 100.
Now the Question is
1. Whether the difference amount shall be accounted for as Interest Income or Capital Gain?
2.In case the Bank sells the same before its maturity will there be any different treatment of the excess amount received over the Purchase Price?
3. Is there any RBI or ICAI Guideline for Accounting for Government Treasury Bills?
Kindly reply
Thanks in Advance
Now the Question is
1. Whether the difference amount shall be accounted for as Interest Income or Capital Gain?
2.In case the Bank sells the same before its maturity will there be any different treatment of the excess amount received over the Purchase Price?
3. Is there any RBI or ICAI Guideline for Accounting for Government Treasury Bills?
Kindly reply
Thanks in Advance
CA Sourabh Agarwal
(Expert)
06 October 2012
Ideally it must be treated interest income for accounting purpose since this difference, in substance, is actually interest earned for an investor.
In case of sale, excess received should treated as profit for sale of investment.
Not sure, whether any such guidelines exist.
In case of sale, excess received should treated as profit for sale of investment.
Not sure, whether any such guidelines exist.
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