Journal entry provisions

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2013 Greetings members , I have a query for journal entry on provison for landfil site ie the previous year provisions (Balance sheet) was R28 million and the current year is R23 million ,

So what entry to process , do we debit provision by R5 million(Reduce the provision R28 prior year - R23 million current year) and where the other leg (credit) must go?

Thanking you in advance,

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

02 July 2013 It seems to be provision reduced,so need to credit the expenses or the ledger which you debited while creating provision for R28 million and debit the provision back

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2013 I get it Ramesh , thank you , normally the entry is DR Expense(Contribution) Income statement and Credit Provisions Balance sheet ,

So in this case of a reduced provision , you debit provision and credit expense by R5 million. So there will be an expense account that is a negative in the income statement by R5 million?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

04 July 2013 yes. since you have provisioned excess and now reversal will be negative only

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