A party not record the bills discounting as a contingent liability in foot notes in balance sheet rather it create a provision for the same,which will be reverse when opposite party from whom B/R receive makes the payment to bank,"is this treatment is correct". If yes then can provision made by record assets & liability at the same time instead made provision from PL a/c.
Menu
Query
Replies (2)
According to AS 29, provisions can be created only if 3 conditions are satisfied, of which first condition says there should be a present obligation as a result of past event. The past event in your case which requires provision to be created could only be "not meeting the liability on due date by the drawer", and not "discounting the bills with the banker". And there is no present obligation on the drawee's part to pay to the banker unless the drawer has defaulted which is a future event. Thus only a contingent liability can be disclosed, unless the possibility of outflow of resources having economic benefits is remote
thanks sir
Recent Threads
- Is MirrorFly an Instant Messaging Software?
- ITR filling for legal heir
- How Can I qualify CA Final Exam?
- Wrong reporting on 22 april 2026 under article inc
- Articeship Form 107
- TAN for Multiple States
- Delivery Challan serial number Issue and return ru
- After filing form 71 For TDS mismatch
- UNCLAIMED TDS REFUND QUERY
- Rcm payable which head
Related Threads
CAclubindia
