Company Books of Accounts

This query is : Resolved

Piyush (Querist)
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13 January 2022 Company has paid huge amount of VAT during 2020-21 for earlier years, which were not outstanding in current liability, because of which now it is affecting current year's profit.

So, whether to show it in Profit & Loss Account because of which books of accounts is showing huge loss
or
can we directly debit to Reserves and surplus without affecting Profit and loss Account of the current year
or is there any other accounting entry option as we don't want to show loss on face of P & L?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 January 2022 Show it in profit and loss and tranfer it to reserve so that disclosure will be there and profit will not be affected.
Claim it in income tax calculation.

Piyush

Piyush (Querist)
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13 January 2022 Thank you Sir. But if We show it in P & L then how to trfr in reserves? For Income Tax if we don't want to claim the same then what will be the accounting?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 January 2022 Credit p and l and and transfer to reserve.
If you don't want to claim in income tax directly debit reserve and disclose in financial statements.

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