Prior period items
This query is : Resolved
30 July 2008
On April 08 Company revised the salary of employees w.e.f 01-01-2006. and subsequently excess amount of salary paid
if such expense is booked in the F.Y.2007-08,is it regarded as prior period item?
if such expense is booked in the F.Y.2007-08,is it regarded as prior period item?
30 July 2008
Prior period items are only those items which aroused bcoz of error or omission in the past years and discovered now.
In the given case, it is arrears of salary paid and not error or omission.
In the given case, it is arrears of salary paid and not error or omission.
31 July 2008
Any liability which can be ascertained should be provided and in a case where it is provided as such not in the relavant year but in the succeeding years it will be termed and classified as a prior period expense. In the instant case, the arrears of salary can be ascertained only at the time of revision and as such the liability is to be provided in the year these are ascertained and can not be said to be Prior Period Expenses.
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