As-12 doubt............................

if monetory grant is received as capital contribution then it will be deducted from that asset.

and if it is received as general grant then it wil be credited to p&l a/c.

what is incorrect in it???

if it relates to

depreciable asset then it will b deffered and systematically credited in p&l a/c

and if it relates to non depreciable asset thencredited to capital reserve account.

who said it will be deferred.

if asset is non depreciable then grant will be credited to capital reserve..

pls give me an example of ur query..

okk so if any obligation attached to a grant then it will deffered.

for example.. govt grants re 50 lakh for d construction of a building then it will b credited in a seprate account till d completion of d building and after completion it will b adjusted from that reserve.

If it is a depreciable asset you have two options

1. Reduce it from the cost of asset and provide depreciation on the reduced value for the remaining life of the asset.

2. Recognise grant seperately and write off every year in proportion to the total depreciation of the asset.

If it is non-depreciable,

1. Reduce from the asset

2. If some expenditure is involved then you can recognised grant seperately and write it off in proportion to expenses