Accounting treatment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 Sir,
Annual Fire Insurance premium of Rs 6000 was paid every year on 1st August, for the renewal of the policy. My Accounting Year Starts from 1st April,2010 to 31st march,2011.
what will be the treatment for the above in Profit & Loss A\C & Balance Sheet?

CA Prashant Gupta

CA Prashant Gupta (Expert)
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27 April 2012 You should charge to P/L only 4000/- and Rs. 2000/- should be shown as prepaid expenses in asset side of balance sheet.

Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 what will be treatment of prepaid Rs 2000 in next year.? how much total expenses charged in Profit & Loss a/c in next year..?

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CA Prashant Gupta

CA Prashant Gupta (Expert)
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27 April 2012 Next year, 2000/- will be charged to P/L and again renewal premium will be bifurcated as done as in previous year.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 That means next year total will be charged in P\L A\c Rs 2000 (from last years advance) and Rs 4000 (from current year..Right..? Total Rs 6000.

CA Prashant Gupta

CA Prashant Gupta (Expert)
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28 April 2012 Yes, its right..

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