05 July 2008
Bank Guarantee charges are to be written off to Profit and Loss account on mercantile basis. The amount of expenses paid for a period falling in the next accounting year may be treated as Prepaid Expenses. Bank Guarantee is a Non funded facility and the same may be invoked on the happening of certain event, as such, it is contingent in nature. A note should appear under the head 'Contingent Liabilities' giving the details and the maximum amount involved.
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