what is the correct accounting treatment for recapture of HST?
e.g. my company recieved a phone bill of $100, plus HST of $13 at 13%.(totaling at $113) because of the "Recapture of HST", i can only claim an ITC of $5 instead of the whole $13. the ONtario postion (PST) of 8% can not be included in ITC (input TAx Credit).
Normally, the entry goes like this:
Debit Phone Expense 100, debit HST Recievable 13, and Credit AP of 113
Under recapture of HST rule (My guess):
Debit Phone Expense 108, Debit HST Recievable 13;
Credit AP of 113, Credit Recapture of HST(or similar account) 8
Am I right??? since the $8 of PST is not allowed to be reclaimed, it should be EXPENSED. Either it is expensed as a seperate expense account (debit $100 and 8$ seperately) OR combined with the real expense (in this case, the $108)? I am just guessing but I am not 100% sure about this, can anyone help???
e.g. my company recieved a phone bill of $100, plus HST of $13 at 13%.(totaling at $113) because of the "Recapture of HST", i can only claim an ITC of $5 instead of the whole $13. the ONtario postion (PST) of 8% can not be included in ITC (input TAx Credit).
Normally, the entry goes like this:
Debit Phone Expense 100, debit HST Recievable 13, and Credit AP of 113
Under recapture of HST rule (My guess):
Debit Phone Expense 108, Debit HST Recievable 13;
Credit AP of 113, Credit Recapture of HST(or similar account) 8
Am I right??? since the $8 of PST is not allowed to be reclaimed, it should be EXPENSED. Either it is expensed as a seperate expense account (debit $100 and 8$ seperately) OR combined with the real expense (in this case, the $108)? I am just guessing but I am not 100% sure about this, can anyone help???