Require accounting entry for MF purchased 4 years ago. Accounting would be done for the first time for the client.
Explanation:-
MF was purchased in 2018, however the client has newer done accounting or prepared Balance sheet / P&L till date.
where should the amount of MF purchased posted ? Should it be transferred to Capital account?
If your doing the accounting as an asset manager, debit bank and credit capital account.
Bank
To Rams capital
cause your client is also a shareholder. This is equity investment held for trading makes it FVTPL investment in the clients books, so recognise asset and gains to profit and loss (finance income). Every year it’s revalued.
Can you tell me the income stream of your client? How you pay him? Like a dividend or fair value changes of the investments. Mutual funds is new to me.
This is IndAS way
Ok I went through this process of income earnings on mutual funds etc., and it’s like above
FVTPL investments
To Bank a/c
initial recognition
Bank a/c
To FVTPL gain
Return earned in year one + adjust the fair value carrying amount of the FVTPL investments in asset. Continue like that every year. )
The Client is having only rental income. The MF is not redeemed, and is paying monthly dividend since 2018.
My Question is that I am only accounting for FY 2019-20, and not for previous years.
So I cannot take Bank into consideration, but since the MF is not yet redeemed is it ok to post the entry as below
By MF account Dr XXXX
To Capital Account XXXX
Could be the right way because your MF account in computer software will automatically deal with deposits in bank. I did attach sample statement.
Do you have details of dividend and interest details till now
Do you have previous year balance sheet as you are newly making but someone might making in previous or you the first one
@ ayusmita - It is a new one, no previous BS, no previous details as such of everything, only have MF details...
CAclubindia
