RECOVERABLE AMOUNTS

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sudhakar ca cwa (Querist)
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10 August 2010 Dear All

please tell me the accounting treating for recoverable expenditure.
in my opinion it has to be deducted from expenditure.
can any one procide me the source for the above treatment
or in another way shall we consider as income.
please help me on this

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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10 August 2010 According to me showing it as income is more suitable. As the representation (reducing it from the expenses) will not be possible in tally or erp. Moreover, it may be possible that you recover this amount in next year where as you actually incurred it in earlier year. So at the time of taking deduction of expenses in Income Tax problems may arise.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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10 August 2010 If you are in the practice of raising the bill on the client towards the recoverable expenditure.. then these expenses can be shown as a net figure instead of showing it as income.

If the above practice is not there then perhaps the best thing is what sudhanshu has suggested.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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10 August 2010 Showing it as a net figure is also not correct as in this case revenue and expenses both will reduced and all that places where preasumptive taxation or revenue are considered for calculation for taxation will be undervalued.

sudhakar ca cwa

sudhakar ca cwa (Querist)
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10 August 2010 thanks for your answer
i want accounting treatment as per AS or IFRS
Please send me where it is mentioned.

sudhakar ca cwa

sudhakar ca cwa (Querist)
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10 August 2010 That meeans any extract from ASor IFRS.
And from IT side no prob wil cum becoz we wil account this in particular year only

DEEPIKA GOEL

DEEPIKA GOEL (Expert)
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11 August 2010 It has been mentioned in IAS-1 that we can not set off expenses and income.

sudhakar ca cwa

sudhakar ca cwa (Querist)
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11 August 2010 Thanks goel
my question is it expense or income

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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11 August 2010 Dear Sudhakar,

There is no point of coufusion in it. As per AS 9 revenue should be recognized when it is accrued or received as the case may be. If we agree with you then all the expenses which are incured by the business and recovered from the cutomers should not be accounted. But this is not the case. There are disclosure requirment as per AS 1. Financial statements should be prepared on true and fair view. If these requirements of different AS will not be followed then Financial Statements will not show true and fair view. So showing both revenue and expenses is important.

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