Entries in the books of accounts - AMC

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In the normal course of accounting we account the expenses incurred so chargeable to the current year as expenses and rest as prepaid expenses. Now the question is about when we have given an AMC{Annual Maintanance Contract]and payment for the said contract is yet not released, what would be the entries to be passed in the books of account.[i.e, AMC period starts from 15.08.2008 to 14.08.09].

AI Summary

Guidance on Accounting for Pending AMC Payments: Accrual, Prepaid Expenses, and Liabilities Explained. A query was raised about accounting entries for an Annual Maintenance Contract (AMC) when payment is pending. One response suggested using the renewal date as the accrual date for annual expenses like AMC, insurance, and taxes. Expenses from the previous year should be charged to the current year, and unpaid expenses by 31/03/09 should be recorded as liabilities. Another response advised debiting repairs as expenses from 14/08/08 to 31/03 and treating the remainder as prepaid expenses, with a liability created for the entire amount.