Accounting treatment for reversal of provision of liability
This query is : Resolved
Gayathri Devi
(Querist)
21 September 2016
Dear All
The company bought the building 6 years ago on loan. For that provision for liability was created in the same year.
Depreciation was started to claim on yearly basis. But as on date still the loan was not repaid. Now I want to reverse the provision for non repayment because due to some circumstances no need of repay that loan amount.
Kindly someone guide me the accounting treatment.
The company bought the building 6 years ago on loan. For that provision for liability was created in the same year.
Depreciation was started to claim on yearly basis. But as on date still the loan was not repaid. Now I want to reverse the provision for non repayment because due to some circumstances no need of repay that loan amount.
Kindly someone guide me the accounting treatment.
Sandeep Dharar
(Expert)
22 September 2016
Dear Gayathri
Please elaborate the circumstances for non repayment of loan, coz there may b some thing for which the bank/financial institution is not demanding their money back(with interest).
Please elaborate the circumstances for non repayment of loan, coz there may b some thing for which the bank/financial institution is not demanding their money back(with interest).
23 September 2016
By reversing the provision of expenses, you need to show the indirect income. It means that provision of expenses has to be debited and other income has to be credited.
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