Passing of accounting entry
This query is : Resolved
22 October 2024
A four wheeler vehicle is registered in the name of Pvt. Ltd. Company 'X' and depreciation is claimed every year.
Due to some reasons the above vehicle underwent for repairs and maintenance and the invoice amount was Rs. 2.73 lacs and this invoice amount was paid through Bank transaction by another Pvt. Ltd. Company 'Y' due to shortage of funds in Pvt. Ltd. Company 'X' .
One of the Directors in both the Companies is the same person.
How to pass the entries in books of account for the above payment of Rs. 2.73 lacs in both the Companies .
Any implication as per Income Tax Act and in reporting.
Plz clarify.
Due to some reasons the above vehicle underwent for repairs and maintenance and the invoice amount was Rs. 2.73 lacs and this invoice amount was paid through Bank transaction by another Pvt. Ltd. Company 'Y' due to shortage of funds in Pvt. Ltd. Company 'X' .
One of the Directors in both the Companies is the same person.
How to pass the entries in books of account for the above payment of Rs. 2.73 lacs in both the Companies .
Any implication as per Income Tax Act and in reporting.
Plz clarify.
22 October 2024
Company X (Vehicle Owner)
Debit: Vehicle Repair & Maintenance Expenses (Expense Account) - Rs. 2.73 lacs
Credit: Debtors/Payable to Company Y (Current Liability) - Rs. 2.73 lacs
Company Y (Paying Company)
Debit: Sundries/Payable by Company X (Current Asset) - Rs. 2.73 lacs
Credit: Bank Account (Asset Account) - Rs. 2.73 lacs
Debit: Vehicle Repair & Maintenance Expenses (Expense Account) - Rs. 2.73 lacs
Credit: Debtors/Payable to Company Y (Current Liability) - Rs. 2.73 lacs
Company Y (Paying Company)
Debit: Sundries/Payable by Company X (Current Asset) - Rs. 2.73 lacs
Credit: Bank Account (Asset Account) - Rs. 2.73 lacs
22 October 2024
Does this transaction come under Related Party Transaction ?
22 October 2024
What if the entry is passed in the books of 'Y' as follows :
Vehicle Repairs & Maintenance Exps ...Dr
To Bank Account
Vehicle Repairs & Maintenance Exps ...Dr
To Bank Account
22 October 2024
What if the entry is passed in the books of 'Y' as follows :
Vehicle Repairs & Maintenance Exps ...Dr
To Bank Account
Vehicle Repairs & Maintenance Exps ...Dr
To Bank Account
22 October 2024
As the vehicle is not owned or hired by 'Y', that would be wrong entry.
22 October 2024
As such there are no transactions between these companies to be termed as related party transactions. A Related Party Transaction (RPT) refers to a transfer of resources, services, or obligations between entities that are connected through a relationship of control, ownership, or management.
22 October 2024
Thank you very much Sir for your excellent clarification.
22 October 2024
You are welcome.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- Liable to deduct tds and 44ADA
- Sale of Equity shares for Purchase of Residential Property
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- ECO SUPPLY REPORTIONG IN GSTR-1
- Is Interest applicable for payment made through credit ledger vide DRC03 for FY 2020-21 & 2021-22
- CCFS 2026 Schemed
- Subscription paid to foreign customer
- Two seprate Invoice needed
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
