i want to know accounting treatment for provision for diminuation in value of investments
Kaushal Desai (CA FINAL) (44 Points)
06 January 2010i want to know accounting treatment for provision for diminuation in value of investments
CA Ashish Bansal
(Manager Finance & Accounts)
(73 Points)
Replied 06 January 2010
Prov for loss on investments A/c ( debit to P/L A/c)
To Investments A/c (Reduced fron Investments)
Amir
(Learner)
(4016 Points)
Replied 06 January 2010
ASHISH IS RITE
AN ALTERNATIVE TO THAT CAN BE
A) LOSS ON DIMMUNITION OF INVESTMENT A/C..............DR
TO PROVISION FOR LOSS ON DIMMUNITION OF INVESTMENT
B) PROFIT/LOSS A/C...........................DR
TO LOSS ON DIMMUNITION OF INVESTMENT A/C
AND
PROVISION FOR LOSS ON DIMMUNITION OF INVESTMENT A/C CAN BE SHOWN AS DEDUCTION FROM INVESTMENT IN THE BALANCE SHEET...
Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 07 January 2010
As per AS 13 the increase/decrease in the value of investment is credited/debited to Profit and Loss Account. No point in creating and carrying provision for diminution in Balance Sheet. For this only a simple entry is sufficient like: Profit & Loss A/c Dr. to Investment A/c.
RAVI
(CA Practice )
(25 Points)
Replied 27 September 2016
Hello Jag Bhai, Amir Bhai & Ashish Bhai...
I have reduction in Investment by 1,98,000 & P&L has only Auidt fees of Rs. 1000.
Now is it possible, if I dont want to show the same in P&L A/c.
How can i route the reduction in investments without involving Profit & Loss Account OR by note debiting P&L Account by Rs. 1,98,000, as ultimately its Reserves & Surplus gone get impacted with this amount (1,99,000 = Inv Reduced 1,98,000 + Audit Fees 1,000)
Since I dont want to show the reduced value in P&L A/c.
Can you help , in that case what entry to pass and whether any disclosure is required in Notes to Accounts.
CAclubindia
