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Invocation of guarantee

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(Querist)
16 July 2015 Dear Experts,

My company capitalize one asset on 31.01.2015. After commencement of asset some parts found to be of poor quality. and for which company invoke the guarantee given by the vendor.
Now my question is what is the treatment of the sum received against guarantee invocation?
Should it be reduced from the assets value?
(if yes, what should be the treatment of depreciation provided on this amount.)or it should be recognized as income in the profit and loss account?
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
16 July 2015 It has to be reduced from the asset value and depreciation on this portion has to be withdrawn.
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Mohit Singla

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Mohit Singla (Querist)
16 July 2015 Thanks
Seetharaman
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