Depreciation in Trust Assets

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the treatment of depreciation for assets within a trust, particularly concerning schools and charitable projects. For charitable and educational trusts, the purchase of assets is typically treated as an 'application of funds', meaning depreciation isn't charged. This allows the full purchase cost to be deducted from income and donations, potentially leading to no income tax if 85% of funds are applied to charitable activities. The advice confirms that a financially independent school project is still considered part of the trust's charitable activities.

Shailendra Jaiswal,

Shailendra Jaiswal, (Querist)
Follow

12 November 2022 Hi,
I join as Accountant in a School of a Trust , Trust having multipole project, Commercial and Charitable

I see that school not taking depreciation in a account

please guide me on trust assets which he purchased for depreciation and some more special concern about this

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

12 November 2022 In case of charitable and educational trust entire purchase of assets were treated as application of funds.
Hence no depreciation charged in the accounts.

Shailendra Jaiswal,

Shailendra Jaiswal, (Querist)
Follow

12 November 2022 what is application of funds
and what will be the treatment of purchase of assets in trust a/c

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

12 November 2022 Entire purchase of fixed assets is allowed as deduction from the income and donations of the trust as application of funds.
85% of the donations and income received is applied for charitable activities and purchase of assets for charitable activities then no income tax applicable on the trust.

Shailendra Jaiswal,

Shailendra Jaiswal, (Querist)
Follow

15 November 2022 i'm basically handling only school project of the trust, school is financially independent from trust , its have its own income and exp. so please suggest me accordingly

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

15 November 2022 School will be part of charitable activities of the trust.

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