sanmati jain
(article)
(46 Points)
Replied 03 January 2012
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.
sanmati jain
(article)
(46 Points)
Replied 03 January 2012
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.
sanmati jain
(article)
(46 Points)
Replied 03 January 2012
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..
sanmati jain
(article)
(46 Points)
Replied 03 January 2012
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.
Yogesh Bhandari
(CA FINAL Student)
(429 Points)
Replied 04 January 2012
Anupam Bajaj
(Student)
(111 Points)
Replied 04 January 2012
Vishwas V Rao
( Chartered Accountant)
(239 Points)
Replied 04 January 2012
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
Originally posted by : Yogesh Bhandari | ||
Grants related to non-depreciable assets are credited to capital reserve under this method, as there is usually no charge to income in respect of such assets. However, if a grant related to a non-depreciable asset requires the fulfilment of certain obligations, the grant is credited to income over the same period over which the cost of meeting such obligations is charged to income. The deferred income is suitably disclosed in the balance sheet pending its apportionment to profit and loss account. |
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