Accounting Treatment
This query is : Resolved
04 June 2011
What will be the accounting treatment, if liabilities under the account head of Sundry creditors in the books of a limited company paid by a sole proprietorship firm with considering that the liability will no more with the limited company for those sundry creditors whereas in exchange of that the Proprietor (resigned as Director of that Pvt. Ltd. Co.)was not received any assets value from the said company.
05 June 2011
See this is the replacement of one creditor to another creditor and old creditor was not being paid by the compnay, it is being paid by a individual...and if ultimately this new individual waiving off the loan paid by him so it will be indirect income of the company
06 June 2011
Sir,
Thanks for your reply but we need to know that what will be the treatment in the books of Proprietorship firm. Ultimately the creditors bills which was made in favour of the limited company and the payment of that bills made from proprietorship firm, in this situation that payment how will be taken into account in the books of proprietorship firm.
Thanks for your reply but we need to know that what will be the treatment in the books of Proprietorship firm. Ultimately the creditors bills which was made in favour of the limited company and the payment of that bills made from proprietorship firm, in this situation that payment how will be taken into account in the books of proprietorship firm.
06 June 2011
Dear Manoj as per your question prop firm is paying money and getting nothing. In balance sheet all assets including advances are shown when they have realizable value in cash or in kind. In your case if proprietor after payment from Prop firm not getting any thing so better to write off this advances in the books of Prop firm
08 June 2011
Sir,
Thanks for your valuable suggestion. To write off this amount can we adjust this amount other than capital or adjustment with the capital is the only option. and if the amount is between 50 to 60 lacs, can we adjust in a single year.
Thanks for your valuable suggestion. To write off this amount can we adjust this amount other than capital or adjustment with the capital is the only option. and if the amount is between 50 to 60 lacs, can we adjust in a single year.
08 June 2011
See you may show as a drawing or you can show as a expense however IT officer will not allow because it is not related to any busienss expenses....you can treat this as a drawing but by this the capital will go down heavily
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