Lc margin

Dear Sir,

I have negotiated letter of Credit to the extent of Rs 30 Crores. The bank has taken 10% margin from my CC amounting to Rs 3 Crores. 

In balance sheet above will appear as below

Liabilities                                                Asset

Letter of Credit             30.00                   FD agst LC 3

or

Liablities

Letter of Credit net of

Margin                        27.00    

Which presentation is correct as per AS

Please let me know.

Thanks & Regards,

Murli

 

 

Replies (1)

Dear Sir,

I assume you mean you have discounted an LC of Rs. 30 Crores, where in Rs 3 Crores has been kept as margin. in this case you will reduce your debtors by Rs 30 Crores and increase your Bank balance by Rs 27 Crores and show Rs 3 Crores FD in current assets seperately.

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