Please let me know:
When Bank Guarantee is given on companies' behalf :
1) what accounting entry needs to be passed?
2)What disclosures are to be made in notes to accounts?
Please answer questionwise.Thanks.
hemanth
(Articles & Final Student)
(55 Points)
Replied 09 July 2008
There is no entry required for banker guarantee
When BG is utilised the utilised amount as to be shown as contingent liablity in financil statements
Prem Kumar
(Articled student--Final)
(375 Points)
Replied 29 July 2008
| Originally posted by :hemanth | ||
| " | There is no entry required for banker guarantee When BG is utilised the utilised amount as to be shown as contingent liablity in financil statements |
" |
gayathri subramaniam
(aca)
(59 Points)
Replied 29 July 2008
| Originally posted by :Prem Kumar | ||
| " | Originally posted by :hemanth " There is no entry required for banker guarantee When BG is utilised the utilised amount as to be shown as contingent liablity in financil statements " |
" |
V P Narasimhan
(Accounts Manager)
(791 Points)
Replied 30 January 2009
Bank guarantee is the limit as good as overdraft facility. It may may of several types viz., for advance, for performance ie. in order to get advance from the customer say 10% of the ordr value you have to provide a bank advance guarantee to grab the advance. Thi is being done that why/what guarantee you execute the order or inorder to execute the order you require money. The validity period may be upto completion of the order execution. Extension in all cases relates to posponment of the execution of the obligation/ordr. At time if you have to pay EMD for 10.00 lacs or so you may produce a Bank guartantee to procure the order. Suppose your Limit with the Banker is 85 lacs it may be including 15.00 lacs of bank guarantee. Failing in your obligation willbedebited by the bank with all dues together with interest+charges as the case may be. At times it willbe issued on the personal gound of the chairman/CEO as an individualcapacity. One point has to be kept in mind is that a guarantee limit is purely based on the limitation of liability of the organisation in reovlving in nature at the time of cancellation of guarantee after it expiry date. In this Banmker acts as on orbitar & plays a safe role by giving you a guarantee & if any pros and cons arised it will simply debit your account to that extent
subodh
(Service)
(88 Points)
Replied 02 October 2009
SHIVRATAN SHARMA
(Sr. Acountant)
(63 Points)
Replied 03 October 2009
| Originally posted by :Anil | ||
| " |
Please let me know:
1. No any accounting entry needs to be passed for execution of Bank Guaranntee except bank charges/commision. 2. Disclosure in Notes on accounts : Contigent Liability against outstanding Bank Guarantee . |
" |
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