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Accounting for term loan sanctioned and not disbursed

A/c entries 1590 views 1 replies

S Uday kumar

AGM

32 Points Joined February 2010

Hi Members,

One of my client s got sanction of the Term Loan of Rs.10.00 cr on last week of march and disbursement was made on first week of April. Whether can we account the above entry in accrual basis as Term loan receivable account dr to Term loan account to improve current ratio as on 31st March 2012 Balance sheet. My Client has already installed the Fixed assets and accounted ( With the internal accrual and Short term Creditors) . However, to match long term source and application whether can we do this. Thanks in advance to clarification

Regards

Uday Kumar CA

Replies (1)

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

I think that the concept of accrual accounting is related only to items of revenue & expenses as pe AS-1. the term loan is neither an revenue nor an expense. Hence it should be acconted for in the books only when the term loan is being disbursed in the month apr12 and not before that considering the concept of prudence as per AS-1.