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How to account proceeds of a performance bond

The performance bond is insurance against loss of income so proceeds should go to income?

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Hello all .  Should I credit proceeds of a performance bond to the asset account as directly attributable "costs" or other income as the performance bond was insurance against loss of revenue. Your advise will be highly appreciated

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By 356B
19th Jul 2019 11:10

A lot more detail would help (circumstances, dates, amounts etc.)

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to 356B
19th Jul 2019 20:43

Many thanks. The contract was for GBP 320k. A performance bond was given by contractor for 15.9k. the contractor went bust client managed to finish the project within budget. Issuing bank paid up the bond. Clients loss is revenue he could have earned had the project finished in time hope that helps.

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23rd Jul 2019 17:30

Hello All
Any advise on accounting for performance bond proceeds.
Fellow Accountant in distress

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By 356B
24th Jul 2019 11:10

The receipt is a revenue item.

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