A company has given mobile phones to its employees & had made payment for the same & it was capitalised. It recovers the cost of mobile phones from the employees monthly salary & credits the procedes to asset a/c. Is the accounting tratment correct? If not then what should be the accounting treatment?
Regards
When payment is made by the company it can be shown as staff advance and adjustment from salary should settle the staff advance
It is accountingly correct to debit asset a/c for purchase of mobile phones on behalf of the employee.
The debit should go to the respective staff advance ac and once the amount is paid by cash or thourgh deduction in salary a/c , that time to credit advance a.c.
This is a very normal practice adopted by all companies for any expenses /payment incurred on behalf of employee. They do this so that employee enjoy the benefit of better price when purchased in bulk etc.
All the amount shall be debited to Advances - Staff then recovery amount has to credited to respective advances amounts.
Dear
You can a/c it as Amount Recoverable
CAclubindia
