Depreciation after goverment grants?

Hello Sir,

Our organisation has received an goverment grant on a depreciable asset. But from the last 2 years depreciation was provided on its original cost. now, after receiving the grant What would be the treatment in the books of accounts if I use capital approach  and deduct the value of grant from Gross book value of the asset and please specify any alternate method if applicable?

Thanks in advance.

Regards

Rahul Gupta

Replies (3)

just simply deduct the  amt of grant from the block in which that asset falls and then see what remains in your block for dep. purpose.

Dear Rahul,

 

As per AS-12, u may show the depreciation by deducting it from the net value of asset appearing in the B.Sheet. (The dep. will be calculated on this net amount)

U may also show the gross value of asset in the Asset side along with the grant amount in the liability side. The depreciation will be deducted from the aaset side  as well as from the liability side, (calculation will be done at the rate prescribed on the respective gross amounts ie. on gross value of asset as well as the amount of grant)

Dear Friends,

Thanx for your replies.

But still i have a doubt.

actually depreciation was provided for 2 years, but as per AS-12 the depreciation should be charged on NET BOOK VALUE i.e after deducting grant received from the gross book value of the asset.

so what about the earlier depreciation provided? OR the depreciation on the asset should be provided prspectively i.e after deducting the grant received from now?

I m confused on these points.

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