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AMC

faru faru (b) (108 Points)

01 May 2011

sir my company is an engineering company. we have amc incomes. suppose we enter into an amc contract with our client for Rs 10,000 payable in two instalments (6 months) then how will the income be recorded? plz reply ASAP

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5 Replies

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 01 May 2011

Since the AMC contract is time period basded, it should be accounted for on a proportionate basis (with time).

faru faru (b) (108 Points)
Replied 01 May 2011

how will the entries be passed if amc has been entered on 1/4/2011?

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 01 May 2011

If interim accounts are prepared, then at the end of the first quarter, you should have 2,500 as revenue and 2,500 as advance from customers. In case no interim statements are needed, we can simply recognise the part of the AMC revenue that is due till the end of the current accounting period in the same period itself, which in thisd case would be the entire Rs. 10,000.

faru faru (b) (108 Points)
Replied 02 May 2011

i have a better idea... 1/4/2011 SUNDRY DEBTORS A/C DR. 5000 TO DEFERRED AMC INCOME 5000 1/4/2011 DEFERRED AMC INCOME A/C DR. 1000 TO AMC INCOME 1000 THIS ENTRY WILL BE MADE IN EACH MONTH TILL RS. 5000 IS FINISHED FROM DEFERRED INCOME A/C NOW AFTER 6 MONTHS AGAIN WE WILL PASS THE ENTRY SUNDRY DEBTORS A/C DR. 5000 TO DEFERRED INCOME 5000 NOW EACH MONTH WE WILL AGAIN BE PASSING THE BELOW ENTRY TILL THE AMT IN DEFERRED INCOME IS FINISHED: DEFERRED AMC INCOME A/C DR. 1000 TO AMC INCOME 1000