Believe in Yourself (article) (139 Points)
27 July 2012Plz help,plz reply asap, very urgent
Our company paid advance to a contractor company(Capital Expenditure) after deducting TDS in the month of mar 2012,,and receive the bill from the party in the month of march dated 16.03.2012 itself, but hadnot booked the bill in march since the bill was not approved by the management.
Now the company booked the bill in april 2012 after approval from management,
Now plz guide whether this bill is being treated as prior period expense or not.
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 27 July 2012
Was the approval from management given before finalizing the accounts for the year, if yes, then the bill needs to be booked in 2011-12 only.
However if the same was being approved after finalization of the accounts & AGM then as per the co's policy that the bills are not booked until approved by teh mgt, teh saem can be booked 2012-13 & necessary explaantion needs to be provided to the I-T authorities.
C.A.M.S.ROY
(C. A.)
(478 Points)
Replied 27 July 2012
As per my opinion it shall be treated as prior period, Bill date showing the march that is relevant date.
it is not a relevant that mgt has approved the bill late
Other opinion may possible
Believe in Yourself
(article)
(139 Points)
Replied 27 July 2012
| Originally posted by : Giridhar S Karandikar | ||
 |
whether we book it by Bill date or in the month of april. |
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Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 27 July 2012
Can't the entry be cancelled in apr12 & book it in mar12 in the ERP. have the necessary authorizations in place.
Yogesh Goel
(Chartered Accountant)
(192 Points)
Replied 28 July 2012
In my opinion, in regard to advance paid in March, material fact is “the expense( to which this advance relates) pertains to which period”. AS 5 Governing prior period items states that the AS relates to income or expense which arise in current period due to error or omission in preparation of financial statements of one or more prior periods. i.e. for example a vendor raises you an invoice for Maintenance of plant and machinery for month of January 2011 in month of September 2012. As it was omitted to be raised by the vendor, then this expense shall be treated as prior period expense while prepairing Balance sheet and P and l for 31.3.2013, since it relate to prior period (31.3.2011). In current case as also suggested by Mr. Giridhar S Karandikar since bill itself contains date 16.3.2012 book it in March on same date.
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