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Contingent liability - materialised

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(Querist)
25 January 2008
Can anyone guide me on the following?

A bank guarantee was given by a company which was encashed by the party. Earlier the amount of guarantee was shown as Contingent liability. Though the same is encashed, company is sure to recover the same but this litigation process may take some time. Till the time, do we need to adjust financial records for the amount?

Thanks in advance.
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S.Srinivasaraghavan

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S.Srinivasaraghavan (Expert)
26 January 2008 It depends upon the assessment of recoverability and the nature of the payment. In the absence of details facts of the case no advice can be possible
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CA. Dashrath Maheshwari

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CA. Dashrath Maheshwari (Expert)
28 January 2008 yES, Itz obvious that if BG is encashed, u hav to adjust ur FR.
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