On 1.4.2001 ABC Ltd. received Government grant of ` 300 lakhs for acquisition of a
machinery costing ` 1,500 lakhs. The grant was credited to the cost of the asset. The life
of the machinery is 5 years. The machinery is depreciated at 20% on WDV basis. The
Company had to refund the grant in May 2004 due to non-fulfillment of certain conditions.
How you would deal with the refund of grant in the books of ABC Ltd.?
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AS 12
Replies (2)
In your case govt grant credited to asset a/c when it was received. Now you will refund that grant, then it should be debited to Assets a/c.
First deduct grant amt from buk value(1500-300=1200)
Then calculate depreciation for 3 yrs by WDV method. Book value on May 2004 will be 614.4. Add value of grant 300 .Then calculate dep prospectivley on total.
Then calculate depreciation for 3 yrs by WDV method. Book value on May 2004 will be 614.4. Add value of grant 300 .Then calculate dep prospectivley on total.
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