Deposit received

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April 14, 2019 at 12:51 pm #512367
nikaido
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i was going through the past exam paper, the entity received a deposit in respect of an asset due for a completion. if the entity failed to complete the asset the deposit would be returned, although the examiner didnt touch on the treatment of deposit received i was wondering what would be the double entry for the deposit received

Dr, Bank ( deposit )

Cr ???

TID and regards
April 16, 2019 at 8:54 pm #513161
P2-D2
Keymaster
- Topics: 4
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Hi,

It would be treated as deferred income and released to profit or loss once the asset is complete. If it isn’t completed then we reverse the original entry.

Thanks
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