Accounting of specific grant
Querist : Anonymous
Society Spent Rs. 256000 on building construction.
How should we account donation in books of accounts. Society not providing any depreciation on building.
As per AS 12 second method of accounting of donation for fixed asset, deferred income and useful life not ascertainable.
Whether Society show specific donation as a capital reserve and show building at Rs. 256000.
1. Under first method grant is shown as deduction from the gross value of assets concerned in arriving at book value.Thus grant is recognized in the p&l by way of reduced depreciation.
2. Grant is treated as deferred income & recognized in the p&L on systematic and rational basis over the useful life of the assets.
Until the building is not constructed, no depreciation is chargeable and hence there will be no recognition of grant in the P&L. After the completion of building you can transfer the grant to p&l on the basis of depreciation charged to the building.
Querist : Anonymous
what if ? Govt agency constructed building for soceity from MLA fund. (No Monitory transfer between society and MLA)
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