MAT Credit Entitlement

This query is : Resolved

CA. Jyoti Baid (Querist)
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11 May 2010 Respected All,

The company had created MAT Credit Entitlement as an asset and shown under loans & advances in previous years.

In the current year, the company is paying normal taxes and hence utilising the amount of Mat Credit.

what are the journal entries it needs to make in the books of accounts?

AND

What will be the presentation in Balance sheet and in Profit & Loss account?

Regards

Aditya Maheshwari

Aditya Maheshwari (Expert)
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11 May 2010 Reverse the entry which u passed for creating MAT credit and the balance in MAT credit will be reflected in assets only.

CA. Jyoti Baid

CA. Jyoti Baid (Querist)
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11 May 2010 The entry passed was:
MAT Dr.
To P/L account.

Now I have passed:( as per guidance note on mat)
PFT Dr.(full amount)
To P/L account
MAT (adjusted amount reversed)
To PFT

Is it Coorect or Ihave to reverse MAT through P/L Account

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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11 May 2010 The net effect of both the ways is the same ony on the P & L. Follow the way as shown in the guidance note.

You can pass it thorugh P & L Account also no problem but better to follow guidance note only.