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Accounting entry

Govind Shamsundar lakhotiya (article) (31 Points)

08 February 2014

Plz tell me what will be the accounting entry in my and the person giving me money for not carring any business / activity in both book......

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7 Replies

CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 08 February 2014

In such a case generally we are trated as unsecured creditor and debtors.

So,

01. In the Books of you, accouting entry would be :

Cash a/c Dr

To Xyz a/c (Name of person who giving you money)

(Being unsecured loan taken from Mr Xyz)

02. In the Books of other Party , accouting entry would be :

Your Name a/c Dr

To Cash a/c

(Being unsecured loan given to ABC.)

I hope I understood your question and answer it..

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CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 08 February 2014

In such a case generally we are trated as unsecured credir and debtors.

So,

01. In the Books of you, accouting entry would be :

Cash a/c Dr

To Xyz a/c (Name of person who giving you money)

(Being unsecured loan taken from Mr Xyz)

02. In the Books of other Party , accouting entry would be :

Your Name a/c Dr

To Cash a/c

(Being unsecured loan given to ABC.)

I hope I understood your question and answer it..

Govind Shamsundar lakhotiya (article) (31 Points)
Replied 08 February 2014

How can we treat it as a loan this was the full and final settelment for me .... I am not going to receive any peny from that person in future we made agreement for not carring that business by me.....

Mihir (Wealth Manager) (5293 Points)
Replied 08 February 2014

I think this is a non-compete fees.

The recepient of the non-compete fees will have to book it as business income or income from other sources. And the person paying it may treat it as expense deductible.

Wait for more replies.

Govind Shamsundar lakhotiya (article) (31 Points)
Replied 08 February 2014

Yes ur right but what entry to pass in book...

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CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 08 February 2014

oopss ! Sorry I was not understand your question. Now I got your point.

01. If this amount is not a big (Materility concept) then you can directly charge to your P & L Income as Misc. Income.

Entry would be..

Cash a/c Dr

To Misc Income

02. You can also treat this income as settlement income or Remuneration income or as Good will or Royalty. These all are oprions available for you. This looks for comfortable and particular then only Misc. Income.

Prem (Accountant) (22 Points)
Replied 08 February 2014

Dear Govind

The income should be spread over period treated as capital receipt in your books of a/c and

capital expenses in giver's books of a/c.

AS 9 "Revenue Recognition" applies.

Period can be minimum 3 to 5 years.

thanks

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Accounting entry

7 Replies

In such a case generally we are trated as unsecured creditor and debtors.

So,

01. In the Books of you, accouting entry would be :

Cash a/c Dr

To Xyz a/c (Name of person who giving you money)

(Being unsecured loan taken from Mr Xyz)

02. In the Books of other Party , accouting entry would be :

Your Name a/c Dr

To Cash a/c

(Being unsecured loan given to ABC.)

I hope I understood your question and answer it..

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In such a case generally we are trated as unsecured credir and debtors.

So,

01. In the Books of you, accouting entry would be :

Cash a/c Dr

To Xyz a/c (Name of person who giving you money)

(Being unsecured loan taken from Mr Xyz)

02. In the Books of other Party , accouting entry would be :

Your Name a/c Dr

To Cash a/c

(Being unsecured loan given to ABC.)

I hope I understood your question and answer it..

oopss ! Sorry I was not understand your question. Now I got your point.

01. If this amount is not a big (Materility concept) then you can directly charge to your P & L Income as Misc. Income.

Entry would be..

Cash a/c Dr

To Misc Income

02. You can also treat this income as settlement income or Remuneration income or as Good will or Royalty. These all are oprions available for you. This looks for comfortable and particular then only Misc. Income.

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