on 05-27-2016 8:34 AM
Dear Friends,
I have a query on how to post and manage the quarter end interest and Tax entries for a Quarterly compounding FDs.
I will explain with an example:-
FD start date- 22 Aug 2014
FD end date- 22 Aug 2015
Quarterly compounding FD.
I have used derived flows for Tax from Interest capitalization entries.
Flows will be on following date:-
22.08.2014 Investment
22.11.2014 Interest cap
Tax
22.02.2015 Interest cap
Tax
22.05.2015 Interest cap
Tax
22.08.2015 Interest cap
Tax
Final repayment
The accounting entries are as follows:-
1) For interest capitalization
Investment account Dr.
Interest on FD Cr.
2) For Tax,
Tax receivable Dr.
Investment account Cr.
Here, Tax is always reduced from the quarterly compounding interest for further compounding effect.
Now My question is, how can we post the Tax on 31st march 2015. This tax will be calculated for the accrued interest from 22nd Feb 2015 to 31st March 2015.
It has to be considered as banks issue Tax certificate as on 31st march.
If we add an extra Tax entry on 31st march 2015, it will affect the entire final calculation of the maturity amount, As we are going to calculate the tax on 22.05.2015 which already includes the period 22nd Feb 2015 to March 2015
How is this case handled in SAP?
P.S.
Accounting entries for monthly Accrual of interest
Interest Accrued on FD Dr.
Interest on FD Cr.
Regards,
Rohan
Hi Friends,
Can anyone throw some light on this?
Regards,
Rohan
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