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How to recognise income of a Non-performing Assets in Bank? Actual receipt basis or Accrual Basis?

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Question added by Jijumon James , SENIOR ACCOUNTANT , BADR AL SAMAA HOSPITAL
Date Posted: 2015/01/10
VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit and Loss account, and stop further application of interest. This is done by crediting the accrued interest income to Memorandum Interest Accrued account.   On actual cash receipt basis it is reversed from this account from time to time.

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