Subcontractor Retention

Code: 2147
👁 Views: 249

Account Information

Financial Statement Statement of Financial Position
Normal Balance Credit

Definition

Amounts withheld from subcontractor payments as performance guarantee

Common Journal Entries

Retain guarantee from subcontractor

Dr. Subcontractor Invoices
Cr. Subcontractor Retention

Release retention after guarantee period

Dr. Subcontractor Retention
Cr. Bank Account

Deduct claim from subcontractor retention

Dr. Subcontractor Retention
Cr. Claims Income

Write off retention of bankrupt subcontractor

Dr. Bad Debt Expense
Cr. Subcontractor Retention

Retain guarantee from subcontractor

Dr. Subcontractor Invoices
Cr. Subcontractor Retention

Release retention after guarantee period

Dr. Subcontractor Retention
Cr. Bank Account

Deduct claim from subcontractor retention

Dr. Subcontractor Retention
Cr. Claims Income

Write off retention of bankrupt subcontractor

Dr. Bad Debt Expense
Cr. Subcontractor Retention

📐 IFRS vs US GAAP Accounting Treatment

IFRS IFRS 9 Financial Instruments
US GAAP ASC 405 Liabilities

❓ Frequently Asked Questions

Q: When are subcontractor retentions released?

A: After the warranty period agreed in the contract, and after verifying work quality.