Hi Friends,
Need help on AS 29 - Contingent Liability related disclosure
In respect of a 'Supplier contract', there is part performance regarding payment. Now the supplier had send a 'Letter' thru his lawyer demanding balance payment plus interest and penalty. We acknowledge 'balance payment' to the supplier in our accounts. There is no 'legal notice' or any 'suit' at this date.
The Auditors want to disclose 'interest and penal' demand as 'Contingent Liability'. My view is that since there is no legal action initiated by the 'Supplier' and the lawyer is only acting as an 'agent', this does not stand the test of 'contingent liability' as of date.
Let me know your thoughts.
Thanks in advance for the help.
Yuvak
CAclubindia
