Prior period expense, Accounting - Auditing

[Sanjay Vasava]

Dear Sir,

Please explain which type of expenses can be booked as prior period expenses.

How can done accounting??

Any audit points?

Thanks & Regards,

Sanjay Vasava

Posts / Replies

[MARIAPPAN GOVINDARAJAN]

Normally prior period expenses are booked for which already there is no provision has been made. The prior period expenses are booked in the Profit & Loss Adjustment account if it exceeds ₹ 5 lakhs. If it is below it is used to book it for current year expenditure.

[Sanjay Vasava]

Dear Sir,

Service tax credit availability on prior period expense. Please suggest.

Thanks & Regards,

Sanjay Vasava

[MARIAPPAN GOVINDARAJAN]

First you have to consider the provisions of point of taxation. Then you have to consider the time limit for taking the credit.

[Ganeshan Kalyani]

The provision states that the credit shall be taken within one year from the date of invoice. Hence if the prior period expense is booked against the provison of previous year then also credit would be allowed if the invoice is less than one year old.

[Sanjay Vasava]

Dear Sir,

Service provider raised the invoice and mentioned current month date but service period has mentioned feb - 2016. In this case I booked an invoice in respective heads as prior period expense. But I need clearity, we can avail service tax credit or not.

Thanks

Sanjay Vasava

[Ganeshan Kalyani]

Yes, you can take the credit.

[YAGAY AND SUN]

CENVAT credit can be availed within one year from the date of issuance of an Invoice.

[Ganeshan Kalyani]

I am also of the same views as expressed by learned experts.