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 8 Replies

yasaswi gomes (My grammar is 💯 good I)   (6646 Points)
Replied 16 October 2021

That is also like depreciation for intangible assets. 

Software is amortised

Machinery is depreciated

2 Like

Sourav (Student) (23912 Points)
Replied 16 October 2021

Same as depreciation
2 Like

Sujal Jain (30 Points)
Replied 16 October 2021

What is amortisation of grants ?

yasaswi gomes (My grammar is 💯 good I)   (6646 Points)
Replied 16 October 2021

In grants business, there are two methods to accont for asset grants

1. Direct method- reduce the grant amount from asset and then depreciate

2. Indirect method- reduce the asset value by depreciating and then reduce the grant amount.

Both the ways, results are the same. However, you have to amortise the grant annually for both the processes.

eg. if grant amount is 60,000 and asset life is three years

then grant amount= twenty thousand

1 Like

Sujal Jain (30 Points)
Replied 16 October 2021

Please tell it's treatment in Cash Flow Statement

Sourav (Student) (23912 Points)
Replied 16 October 2021

in cash flow statement it will be shown under investing activities

1 Like

yasaswi gomes (My grammar is 💯 good I)   (6646 Points)
Replied 16 October 2021

If the asset is purchased on loan, it will be classified as financing activity. As 3 doesn’t have this classification but IndAS doesnt as well. IAS 7 classifies it as both investment and financing. But since cash is involved, it’s into cash flow statement.

yasaswi gomes (My grammar is 💯 good I)   (6646 Points)
Replied 16 October 2021

In IndAS and as, cash receipts from refund of loans and advances must be used to recognise. 


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