inventory of a company is seized by goverment and the company does not have any control over the inventory so what will be the accounting treatment for this ?
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Inventory seized by goverment
Replies (4)
Quick Summary
You have to create a provsionbased on the outcome to recover the goods. If you can recover the goods through courts, if it is more than 50% chance that you will win create a provision. Based on this, check out contingent liability criteria and recognise accordingly
Under which act
Provisions standard. I did not find any Google search related Provisions+companies acts 2013. They are naming all rules as provisions.
To think of, a provision is a liability. We create a contra asset for provision for receivables. The same way we can create it for inventory as well
Dr. Inventory provision asset
Cr. Goods in transit
This is a contra asset provision. I tried to push it into liabilities and it cannot be done into liabilities. Any better ideas?
Sorry forgot it was an asset previously.
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