Accounting Treatment of Fund Received from YMCA Central Councial to YMCA local unit

Could you please advise on the following?

Situation:

YMCA pudukai collects Rs. 5.60 lakhs in donations to purchase an Ambulance and keeps it as a Special/ earmarked fund for the same purpose. 

The National Council of the YMCA released an additional Rs. 3 lakhs to purchase the Ambulance.

Total  Special Fund is Rs. 8,50,000

How to treat the additional fund received from YMCA National Council in our books - 

Should we add the fund to the Specific fund kept for purchasing the Ambulance? - 

YMCA pudukai spends Rs. 8,67,500 to purchase the Ambulance and registered the same in its name.

Can we debit the depreciation for the year to the PandL for the year ?

OR  we should debit the Specific fund  for the Depreciation every year & Credit the same to Ambulance(Fixed Assets) and not to charge the same to PandL

Kindly advise

 

 

 

 

 

Replies (1)

1)  As per ICAI  guidelines ( please refer ) for Non profit  organization , fund which are received for specific purpose should be shown under Source of  Fund / Capital Fund / Restricted Fund , because same is received for the purpose of  purchase of  Abulance only  .

2) you have to prepare Income & Expenditure Account , and Not profit & Loss account , because YMCA is Non profit Organization .

3) As far as Depreciation is concern, , As per Accounting Standered 10 (PPE , if applicable ) , you have to show under Expenditure side of the  Income & Expenditure , however you may adpot  policy that  has been adopted by other branches of YMCA , as I checked the financial statement of  Dehli branch of YMCA on the internet  , they have routed Depreciation through Capital Fund , discuss with your CA in this regard .

4) Take more opnion on this , and importantly , you must discuss with your CA in this regard . 

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