hi a company named x gives a bank guarntee for a tender of Rs.50000 by making a fixed deposit in the bank, on happening of some event the amount shall be taken off by the company to which the bank guarntee is made. Should this be shown as a contigent liability.
ya
bank guarantees r shown as contingent liability... & not shown in balance sheet..
it will b shown below d balance sheet..
Yes Praveen
The term contingent only used for liabilities & assets which are not recognised becuase their existence will be confirmed at a latter date only by the occurance or non occurance of one or more uncertain future events which is not within the control ofthe enterprise.
So a contingent liability is not recognised in Balance Sheet .It is only disclosed.
The fixed Deposit should come under the Current Assets in the Balance Sheet.
Again, in the Notes to Account the Bank Gurantee should be mentioned in accordance with AS-29 i.e. with disclsures required in that AS.
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