24 June 2007
when a gratuity fund trust receives certain amount of money from the company towards opening a bank account what should be the treatment in R & P account, & Balance sheet? if interest is received on the said amount and if the amount received appears in the balance sheet should it be added to the fund?
whether the amount received is a capital receipt or revenue ? it is a non refundablable amount so.. isn't it a capital receipt?
25 June 2007
Generally there is no obligation on the part of the company to make contribution for opening the bank account. When the trust has been registered, the company would be contributing the initial amount as capital contribution or corpus trust from which the bank account would be opened. As said in the querry if the company has contributed for opening the bank account, if no specific purpose is mentioned, it would be a revenue receipt in the hands of the trust and the voluntary contribution is to be credited. Any interest received on funds invested whether out of corpus contribution or out of non corpus contributions is a revenue receipt and credited to the income and expenditure account. The character of the receipt would not change whether the amount is refundable or non refundable
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