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An amount of a lakh outstanding from a customer is disputed by the customer.How can this be disclosed in the accounts?

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Question added by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice
Date Posted: 2014/01/14
Subhranshu Ganguly
by Subhranshu Ganguly , Quality Analyst. , WIPRO

I have a question. Is the whole amount or part of the amount is disputed. The amount that cannot be recovered has to be treated as a bad debt. Even if the customer is not disputing the whole amount a reserve has to be kept  for bad debt depending on previous experiance.

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

Amount disputed is a contingent liability which has to be disclosed as a footnote in the Financial statements

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