capital subsidy
This query is : Resolved
16 December 2009
can capital subsidy received in respect of an asset in a year be deducted over the years from the cost of the asset?
please refer any case law if any?
please refer any case law if any?
16 December 2009
Refer AS-12 Accounting for Government Grants.
If capital subsidy is received which is related to depreciable fixed assets (generally it is so); then either it can be fully deductible from the cost of the asset
or
Capital subsidy may be treated as deferred income. This income is taken on some rational basis i.e. proportioning it during the useful life of the asset. Hence you can take this option.
CA Rakhecha,Surat
If capital subsidy is received which is related to depreciable fixed assets (generally it is so); then either it can be fully deductible from the cost of the asset
or
Capital subsidy may be treated as deferred income. This income is taken on some rational basis i.e. proportioning it during the useful life of the asset. Hence you can take this option.
CA Rakhecha,Surat
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