Hi,
My query is,
Person is performing some contract. As per tems of contract his client retains 10% of contract valueas retention money if any defect happens in contract. In practice, Person recovers full money and issues bank guarantee to the extent of 10% of contract value. What shoul be the accounting treatment for bank guarantee issued? Shoul it be shown as contingent liability or to be provided? is any disclosure required? Also when guarantee is invoked , what is the accounting entry ther person will pass?
regards
CAclubindia
