External Commercial Borrowings and Plant & MAchinery

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2011 I want to ask query regarding accounting treatment for the following:
My client has ECB and from that borrowings it has imported Machinery which was capitalised last year and depreciation also provided on same.
Now during this current year it is found that there has been some problem in machinery and client is not going to pay the remaining amount to party and even machinery is not in use. So what can be accounting entry for the same? Pl advice.
Thanks

Rakesh Jain

Rakesh Jain (Expert)
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08 June 2011 Dear,

I assume that there is no dispute between buyer and seller.

If company is not going to pay the remaing amount to creditor than such amount should be deducted from the carring value of Machinery.

Provision of AS 26 should be applied on the said assets and accordingly the A/cing treatment shall be done.

With Regards,