Writting Off of Advances and trade debtors

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This query is : Resolved

sayeeda (Querist)

27 April 2009 Hi

If a company write off the advances comprising land advances and trade advances, will these write offs be debited to P&L Account or is there any other methodology of treating as balance sheet item and not routing through P&L A/c.

Thanks & Regards

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

27 April 2009 Generally It has to be routed through Profit and Loss account.

If specifically you do not want to route it through profit and loss account you reduce from your general reserves or bad debts reserve if you have. But you will loose the income tax benefit.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

28 April 2009 The income benefit will be allowed if the debt is fully written and was in nature of business and credited to incomein previous years and not any other advances like land advances and irrespective whether they are debited in profit and loss a/c or not.

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