Bhavani (Fin) (25 Points)
21 March 2012How to account expenditure paid in previous years waived off by the party in current year?
Rs. 8lakh amount booked to P& L as expense in previous yrs waived off .. which has to be adjusted in the coming FY as exp..
Shall it be treated as Misc income and Advance payment?
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 21 March 2012
You will be required to write-back the expense by posting the below entry in the current F.Y.:
party A/C Dr 800000
To- Sundry creditor's written back 800000
As it was booked as an expense to P&L in the previous year, no need to adjust it against the Advance.
shivam gupta
(Student)
(142 Points)
Replied 23 March 2012
As u mentioned in ur question that the amount of expenditure paid to the party in previous year & the party has waived off in current year , it means the service is expected to get in current year from the party & party has waived off in current year so in prevoius year it should be treated as advance & no further adjustment need to be done in current year .
entry in previous year
1) Advance to party A/c Dr. 8L
To Cash 8L
If the party had provided the service in current year then this following entry would have passed
2) Expenses A/c Dr.
To Advance to party
& consequently expenses amount would transferred in P/L
but becoz it did not happen so we have no need to passthe entry no.2
Bhavani
(Fin)
(25 Points)
Replied 28 March 2012
Thanks Shivam and Giridhar for your replies.
While making the payment in previous 4 yrs we booked like this
Expense A/c Dr. 2 lakhs
TO cash Cr. 2 lakhs
Since the party waived off the exp... till 2010... Party has to pay back 8 Lakhs .. which they will not pay in cash... I ahve adjust against the payble amount from 2011 .. yearly 2 Lakhs .. How to account this?
darpan chheda
(Accounts Manager)
(90 Points)
Replied 09 August 2013
The entry will be as under
Bank A/c Dr 8.00 Lacs
To Sundry balance write off/back Cr 8.00 Lacs
The other question is how on earth the payment was made in cash in the first place????
CA Lokesh Pokharna
(CA (Ahmedabad Bhilwara Chittorgarh))
(4128 Points)
Replied 09 August 2013
now it has to be booked by crediting other income (if its related to non related with main business activity
) & debiting by bank a/c/journal whatever applicable.
CAclubindia
