There are various reconciliation items while doing vendor reco which includes invoices where Opex and Capex invoices are there which are not accepted by us and are under dispute. Should provision be created for such Opex and Capex(Material and services) invoice in books?
Pl reply.
When purchase of item in transit, work partially done (work under progress), disputes in invoices and due to which posting of invoice not possible during month end or year end, we can do provision entry by debiting the concerned expense account and crediting the provision account. Once issues are closed we can reverse the provision by debiting the provision account and crediting vendor account.
I am talking about disputes related to old invoices not about Capex material in transit.
Dear Vishal,
As you said the related invoice are in Dispute.
a) If any petition has been filed in the court by the Plantiff (the co. from whom such Invoice Received) then you should talk to the expert i.e Lawyer who is defending this case , evidenve related to these transaction , & after evaluating, if you find that the probability for paying that claims is more likely than not ( more than 50 Percent) then Provision should be made in the A/cs. (As per AS 29)
b) If the same is in Dispute then give the facts regarding those transaction in notes to the Financial Statemtent.
O P Bagla & Co LLP
New Delhi
CA Inter
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A R JADHAV AND ASSOCIATES
Mumbai
CA Inter
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