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About capital subsidy!!

Others 270 views 8 replies
I have machinery last year of Rs. 100 and I depreciate it with 80% so I have remaining asset of Rs. 20 in current year now I received capital subsidy of Rs. 25 now what is the treatment of extra Rs. 5
Replies (8)
in case of capital subsidy (that is in nature of promotors contribution) u have to credit it to capital reserve account
whole amount or remaining amount?
Whole amount ,this is known as capital approach
but I received the subsidy for machinery then how can I treat it as capital reserve?
k but u have received the subsidiary for new machinery,u have to reduce it from the cost.


But how do u depreciated 80% in a year
no no u get me wrong actually in 2016-17 I purchased the asset at that time the depreciation is 80% so I purchased asset of Rs. 100 and depreciation is RS. 80 so net block of 2016-17 is RS. 20
now the year is 2017-18 gross block is RS. 20 I received subsidy of Rs. 25 if I deduct subsidy from the gross block then the asset value get negative in this case what should I do of extra 5 rs. subsidy?
STCG on rs 5 at normal rate
there's no sale of asset in this case. so no CG wud arise.. however you need to recalculate depreciation after considering subsidy and then charge depreciation to revenue


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