10 August 2010
A co. manufactures harvestor combine. It reimburses the money spent by the customers on the spare parts under warranty period as the customer purchase the spare parts from some other places and give us the bill of the same. The bill is usually in the name of the customer. I want to know the accounting entry of the above. How can we adjsut the bills against the bill so produced and what entry can we pass?? Please ans. It is very urgent. Thanks a lot.
10 August 2010
can make provision for the warranty claim on the basis of past trend /estimation or on the basis of Industry standards.Pl note that In - SUPREME COURT OF INDIA - M/s. Rotork Controls India (P) Ltd. Versus Commissioner of Income Tax, Chennai,honorable Apex Court allowed the claim of provision for warranty stating that, "with making of provision on the basis of estimated present value of contingent liability holds good during the assessment years in question qua warranty claims". Whenever you get actual bill you can pass journal entries against those provsion.
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