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Is security deposit of electricity a current asset

Ranjith (ACA) (37 Points)

23 April 2015

Is security deposit for electricity a current asset or long term loans and advance ?Please explain

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MASTER MIND (CA on Duty) (104 Points)
Replied 23 April 2015

The security deposit paid to another entity is a current asset, if the security deposit will be returned within one year of the balance sheet date. The entity holding the security deposit will report it as a current liability, if it is to be repaid within one year of the balance sheet date.

If the security deposit will not be returned within one year of the balance sheet date, the security deposit is reported as a long-term asset by the entity paying the security deposit. The party holding the security deposit will report it as a long-term liability if it will not be returned within one year of the balance sheet date.