accounting entries-government grant

Dear all, 

Can you please tell me the answer of the following question as soon as possible.

This relates to the audit of a hospital. The hospital gets donations in the form of a machinery and equipments along with the bill / invoice for the same(thus no value problem as such). 

On the receipt of the asset the hospital passes the following accounting entry:-

                     Asset a/c Dr.

                             To Capital Reserve

And at the end of the year, they depreciate the asset and passes the following entry:-

                   Depreciation a/c Dr 

                                    To asset

and

                      Profit and loss a/c Dr.

                                  To Depreciation

Nothing is happening to the capital reserve.....

The capital reserve should also have been reduced.\

Can somebody tell me the correct entries..............

Pls pls pls its a little urgent.................

Thanks and regards

Nalini