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Regarding excess outstanding liability in last f y
we provided outstanding liability for a particular exp say Repair and Maintenance Rs 5 Lac for f y ending on 31.03.14 based on estimation.In f y 14-15 total exp against the liability came to rs 4.5 Lac only.
how to treat this excess liability of .50 lac in f y 14-15.how to reverse it.
will it be a prior period item.
Replies (1)
FY 14: Dr. R&M & Cr. Provision for R&M: ₹5 lacs (provision made)
FY 15: Dr. Provision for R&M & Cr. Bank: ₹4.5 lacs (actual exps & payment)
FY15: Dr. Provision for R&M & Cr. R&M: 0.5 lacs (reversal of provision)
There is no prior period expense. 0.5 lacs will be credited to R&M a/c. If u have any expenditure under this head, it will automatically get reduced from this a/c or else it will be shown as income in P&L
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