X ltd has purchased DEPB entitlement for 95 Rs against license value of Rs. 100 from Y ltd for import of raw material. X Ltd has imported material worth 1000 and the import duty component amount is Rs100. By using the DEPB purchased entitlement the import duty amount is adjusted, though license is purchased at 95 from Y. What are the accounting entries to be passed for the transaction-
Whether the given below entries are ok in X Ltd books:
1)for purchase of DEPB entitlement
DEPB entitlement dr 95 (asset)
to party 95
2)for import of material with payment of duty-
Raw material inventory dr 1095
to DEPB entitlement 95
to BANK 1000
or
whether to show raw material with 1100 and give credit to other income of 5 Rs.
regards
Joseph David
CAclubindia
