Dear Experts,
Recieved 70 invoices of FY 2019-2020. Out of which 20 invoices has provisioned in March 2020 and reversed in April 2020 whose value will be 8 lacs and value of other 50 invoices are 15lacs.
Can I account all as prior Period expenditure?if I do so, I'm I eligible for income tax deduction?
wanted to know the consequences accounting as prior Period Expense like auditor qualify, income tax deduction etc.
Thanks in advance your prompt response will help me in proper closing of FY 2021.
Sincerely
Proud follower of ICAI members
Hi, that’s a nice one, the problem is prior period items arising due to errors or omissions will be accepted here and as per AS 5.18 ‘Prior period items are generally infrequent in nature and can be distinguished from changes in accounting estimates. Accounting estimates by their nature are approximations that may need revision as additional information becomes known. For example, income or expense recognised on the outcome of a contingency which previously could not be estimated reliably does not constitute a prior period item.’ But you have a provision for that and if you can explain why they were not accounted for, doubtful invoices, there will some other standard which will cover it.
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