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Subsidy on term loan

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(Querist)
10 February 2012 Dear Experts,

We have a term loan (financial assistance) with SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA and EMI’s are deducted every month (principal + interest). Now SIDBI has issued a letter, stating that our unit has been received CLCSS subsidy from Govt of India of Rs. 2.80 lac so then principal and interest amt reduced in our current month’s E.M.I

My question is what entry to be made for this subsidy in our books ?
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Anand

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Anand (Expert)
11 February 2012 Term Loan Dr
Fixed assets Cr
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Sankar Chakraborty

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Sankar Chakraborty (Querist)
11 February 2012 why fixed asset ? i think 'subsidy' under indirect income

please give me understand
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Anand

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Anand (Expert)
14 February 2012 Subsidy is not your revenue receipt its capital receipt.It is given on investment in fixed assets.
Therefore the same is to be deferred over its useful life. Reduction in fixed asset would mean lower depreciation.
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