Accounting Treatement of "Capital Subsidy" from Govt.

This query is : Resolved

Rave Erd (Querist)
Follow

27 July 2010
A purchase of Machine for production as against Bank Term Loan. In the First Year, the capital subsidy received from Govt. and used for repayment of Term Loan.

what is the method of accounting of the subsidy?

srinath

srinath (Expert)
Follow

27 July 2010 there are two ways of accounting.. either credit to capital reserve or reduce the vaule of the asset

Message likes : 1 times

Sunil

Sunil (Expert)
Follow

27 July 2010 Reduce the value of the asset and then calculate the depreciation. There was a time when people were taking it into capital. Assessment Officers were reducing asset value and calculating depreciation. Finally the Supreme Court had passed order that it is capital receipt and not taxable. Immediately in the next budget the FM rectified the mistake and put it as reduction in the value of asset to calculate depreciation.

Message likes : 1 times

srinath

srinath (Expert)
Follow

28 July 2010 i think the question here relates to AS-12 and not as per income tax

Sunil

Sunil (Expert)
Follow

01 August 2010 Yes. Srinath is right. However, at income tax stage remember to reduce the value of asset for depreciation. That is the law.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

tpksathyan narayanan

S D Kannan

ASIM ATREY AND ASSOCIATES

Tanishka Khandelwal

Vimlesh kumar

Subscribe Now

Accounting Treatement of "Capital Subsidy" from Govt.

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA