Accounting treatment for purchase of import licence

Pradeep Patankar (IFRS ( London)) (289 Points)

29 November 2013  

What will be the accounting entries for the following :

Company has purchased Import Licence of Rs. 5 Cr. for Rs. 1.6 Cr from the open market (Validity 2 years). Which can be utilised for payment of import duty on capital goods only.

Case1:

What if the company utilised whole licence amount in current financial year only.

What will be the amount of Licence to be capitalised ?

 

Case2:

If only 50% of the licence value is utilised for the the payment of duty on import of capital goods, then what will the amount of licence to be capitalised ? and valuation for the remaining part of licence and accounting treatment ?

 

Case3:

What will be the accounting treatment if the whole of licence if unutilised for current financial year ?