Ttreatment in Accounts

This query is : Resolved

P.R.VITTAL RAO (Querist)
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16 August 2007 we have taken security deposits while giving canteen premises and some kitchen equipments. Now the contractor's terms is over and we have recovered some amount from him for the missing items. The balane amount is paid back. The question is
1. The recovered amount is debited to security deposist account and credit is given to fixed asset Account.
2. While the missing item,s cost has to be removed from fixed asset account, a Journal entry debiting write off account and crediting fixed asset account is proposed.
By doing so, two credits are given to fixed assets are given. Please clarify.

CA Mani

CA Mani (Expert)
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16 August 2007 Recovery is to be credited to a new account viz., Disposal of Fixed assets. Entry is as follows:

Security Deposit A/c. Dr. XXX
To Disposal of FA A/c. XXX

WDV of the missing items is to be transferred to the said a/c by passing following entry.

Disposal of FA A/c. Dr. XXX
To FA A/c. XXX

Difference in Disposal A/c. is to be transferred to P&L A/c.

I think this would be the coorect treatment in the said case.

Regards,

Mani

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