provision
This query is : Resolved
27 August 2010
Sir
If a provision is made on 31st March but no bill was received in the next 1 or 2 or 3 yrs then shld the provision be reversed?
rgds
sweta
If a provision is made on 31st March but no bill was received in the next 1 or 2 or 3 yrs then shld the provision be reversed?
rgds
sweta
Aditya Maheshwari
(Expert)
27 August 2010
Yes it should be reversed as provision is made for a specific liability and if the same does not occur over a reasonable period of time then the same should be written back.
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27 August 2010
original entry for provision is:
Expense Dr
To Expense payable
reversal:
Expense payable Dr
To expense
Am I correct?
What will happen to tds if any paid wrt original entry??
Expense Dr
To Expense payable
reversal:
Expense payable Dr
To expense
Am I correct?
What will happen to tds if any paid wrt original entry??
Aditya Maheshwari
(Expert)
27 August 2010
Yes the above entry is correct.
If TDS has been deducted on the party then debit the account with the net amount only i. e. gross expenses - TDS.
eg: expenses 100 - TDS 10 = 90 creditor
now reverse 90 only.
If TDS has been deducted on the party then debit the account with the net amount only i. e. gross expenses - TDS.
eg: expenses 100 - TDS 10 = 90 creditor
now reverse 90 only.
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27 August 2010
Rs. 10 ie TDS paid on provision will be my loss?
can this be adjusted against TDS payable in the next month?
or debit Rs. 10 to P&L as loss but under which head?
can this be adjusted against TDS payable in the next month?
or debit Rs. 10 to P&L as loss but under which head?
Aditya Maheshwari
(Expert)
27 August 2010
See first expenses have been booked at Rs. 100 and TDS has been deducted Rs. 10 and creditors balance is Rs. 90/-.
So now u can reverse only creditors balance i. e. RS. 90/- and net expenses debited in the P & L is Rs. 10 i. e. Rs. 100 earlier debited and 90 now credited which is loss on account of TDS.
Since the TDS is of earlier year the same cannot be used as it is already booked in the name of the creditor and return for the same has already been filed.
So now u can reverse only creditors balance i. e. RS. 90/- and net expenses debited in the P & L is Rs. 10 i. e. Rs. 100 earlier debited and 90 now credited which is loss on account of TDS.
Since the TDS is of earlier year the same cannot be used as it is already booked in the name of the creditor and return for the same has already been filed.
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27 August 2010
Thank you Aditya.
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Aditya Maheshwari
(Expert)
27 August 2010
ok.
Aditya Maheshwari
(Expert)
28 August 2010
ok
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