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Accounting for free consultancy to a firm

11 May 2023

if a professional render free consultancy to a firm 'X' does it is recorded in books of account of firm 'X' means does it is treated as gift received by a firm 'X'

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4 Replies

Yasaswi Gomes new (Finance ) (4479 Points)
Replied 12 May 2023

If it is knowedge contribution of technical know how. Just make a disclosure about the related party relationship, nature of transaction, and amounts of work done for free. The consultant must have a significant control in the managenent decision and he need not hold shares of that company.

If the consultant is giving knowledge due to large transactions occuring between him and the firm and if due to economic dependance than no need to make any disclosures. Eg. This guy comes and gives training usually for a fee and he gave additiinal training as he was payed as a package and its his responsibility to complete trainjng. Etc.

sabyasachi mukherjee (26067 Points)
Replied 12 May 2023

Since it's a free advice but seperate quantifiable disclosure can always be made.

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Atharv Sankliya (1306 Points)
Replied 13 May 2023

Sir what is quantifiable disclosure means?

Yasaswi Gomes new (Finance ) (4479 Points)
Replied 14 May 2023

Hiya quantitative = maths, numbers and formulas. Qualitative means = assumprions, theories, wrtten work etc. We can say accounts is quantitative and marketing a qualitative subject

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