A company takes security deposit amount from its customers for safeguarding itself that its customers will fulfill export obligations or not. The same amount received is deposited in bank as fixed deposits.
Interest is received by the company on fixed deposits (net of TDS) and the same amount of interest is to be remitted back to corresponding customer (net of TDS).
Now, company shows interest receipt as its other income & interest remittance back to customer as Interest Expense. Is this Accounting Treatment Correct?
If not, suggest an accounting treatment after taking all taxes & laws in consideration.
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