My client is an NBFC and having invested in HDFC Liquid fund. I am carrying out the Limited review for Dec'14. The value of HDFC liquid fund has been appreciated as on Dec'14. Should they record the appreciation in books of accounts. If yes, then should they increase the value of Investment (in asset side) and record the gain in P&L account. If we do this then that clause of AS 13 that , current investments should be valued at lower of cost or market value, is being violated. What to do?? Please guide me.
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Recording of appreciation in liquid fund
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Hii,
It is a mutual fund if the amount is increasing then there is a dividend factor u need to account for it sperately
Acc entry would be
HDFC liquid fund ac Dr
To dividend.
So in this way your investment Is increasing in mutual fund and dividend is a tax free income
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