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Clarification regarding subsidy received

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(Querist)
20 June 2012 One of my friend received a subsidy from APSFC. Total amount of APSFC Loan of Rs.20 Lakhs. Subsidy Received Rs.5 Lakhs. The same Rs.5 Lakhs has deducted APSFC directly into account. The subsidy is treated as income or not. What I am passing entry to the books of accounts.
Please suggest the same.
Thanking you Sir,
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Guest (Expert)
20 June 2012 Dear Murali,
Subsidy is a Business Income so it shall be credited in P&L A/C.
1. Bank a/c Dr. 20 L
To Loan a/c 20 L
2. Loan a/c Dr. 5 L
To Subsidy a/c 5 L
3. Subsidy a/c Dr. 5 L
To P&L a/c 5 L
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CA PARAS BAFNA

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CA PARAS BAFNA (Expert)
20 June 2012 In case loan has been received for Building or Plant & Machinery, credit subsidy amount to the respective assets account.




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