Treatment of bank guarantee charges
This query is : Resolved
31 December 2012
One of My client being A state Government Ltd Company.
During the current year the Company has given a Bank Guarantee to one of party from bank against Performance based contract.(i.e. Performance Guarantee) but not Financial Guarantee.
Accordingly the Bank charged to My client's Account towards BG issuance charges which was in Lakhs of Rupees.Our client debited to such charges to Other Expenses.However during the course C & AG Audit the Auditor pointed out that the same should be Financial Cost to Co.hence wrongly debited to Other Expenses instead of Financial Cost/Expenses.
Noe query is whether remarks/observations as pointed out by C & AG Auditor is correct or not as my client is not having any non fund based facility from Bank in the form Bank Guarantee. even they can request to Bank for issuance of Bank Guarantee without Margin in form of FDR so far State Government undertaking is concerned.
During the current year the Company has given a Bank Guarantee to one of party from bank against Performance based contract.(i.e. Performance Guarantee) but not Financial Guarantee.
Accordingly the Bank charged to My client's Account towards BG issuance charges which was in Lakhs of Rupees.Our client debited to such charges to Other Expenses.However during the course C & AG Audit the Auditor pointed out that the same should be Financial Cost to Co.hence wrongly debited to Other Expenses instead of Financial Cost/Expenses.
Noe query is whether remarks/observations as pointed out by C & AG Auditor is correct or not as my client is not having any non fund based facility from Bank in the form Bank Guarantee. even they can request to Bank for issuance of Bank Guarantee without Margin in form of FDR so far State Government undertaking is concerned.
Guest
Guest
(Expert)
10 January 2013
The query by C&AG auditor is in order. BG charges will be a material amount and should be separately classifies under Finance Charges as Bank Charges.
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
- Taxable or Tax exempt
- CAPITAL GAIN BASE ON NOTIFICATION
- Form 140 tds
- TDS Deducted AY-2013-14 Not Reflected in 26as
- ADVANCE PAYMENT OF ADVOCATE
- NRI starting business in India
- Demand Outstanding AY 2013-14 TDS Deducted not shown in 26as
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Eway bill not cancelled within 24 hous what can be due
- GST rate and HSN code for sale of racing horses
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
