Retention at Suppliers

Code: 2142
👁 Views: 237

Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Amounts withheld from supplier payments as performance guarantee

Common Journal Entries

Retain portion of supplier payment

Dr. Purchases
Cr. Accounts Payable
Cr. Retention at Suppliers

Release retention to supplier

Dr. Retention at Suppliers
Cr. Bank Account

Deduct penalty from retention

Dr. Retention at Suppliers
Cr. Penalty Income

Write off retention of insolvent supplier

Dr. Bad Debt Expense
Cr. Retention at Suppliers

Retain portion of supplier payment

Dr. Purchases
Cr. Accounts Payable
Cr. Retention at Suppliers

Release retention to supplier

Dr. Retention at Suppliers
Cr. Bank Account

Deduct penalty from retention

Dr. Retention at Suppliers
Cr. Penalty Income

Write off retention of insolvent supplier

Dr. Bad Debt Expense
Cr. Retention at Suppliers

📐 IFRS vs US GAAP Accounting Treatment

IFRS IFRS 9 Financial Instruments
US GAAP ASC 405 Liabilities

❓ Frequently Asked Questions

Q: What are retentions at suppliers?

A: Amounts withheld by the company from its suppliers' (subcontractors) dues as a guarantee, considered an asset (receivable) until released.