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Donations in kind

Accounting Entries 467 views 2 replies

A Non -profit-organisation received 10 gold coins as donation with instruction from donors to distribute the same to 10 poor women as wedding aid.How to account the receipt of donations in NPO's books?what will be the entry?What will be the entry when the gold coins are distributed in due course to needy women? Is the donations received are revenue receipt in the books of NPO?

Replies (2)

donations received are always revenue receipts unless otherwise agreed...( for example...corpus )

donations in kind shall be accounted at fair value ( receipt and expenditure....unless otherwise agreed....there is no legal provision..nor are there accounting standards because none of them are applicable to NPOs )

considering income tax provisions....revenue accounted on fair value eg 10 gold coins @ 20000...

there is an exemption of 15 % without underlying conditions on gross donations.....that would be rs. 30000......you can deduct the amount you expended ie 200000 ( value of gold coins from the remaining ) that brings a loss of rs 30000.

Note : answer based on the hint that it is a charitable organization

 

 

thank you Mr.jishnu.It is a charitable organisation with 12 A regn.Can you please elaborate the 15 % deduction etc.Since the distribution of gold coins would be in next two or three years, the gold coins valuation revenue  will be clubbed along with other cash donations and proposed to carry over  the spill over if the overall expenditure falls short of 85 % of the total receipts by filing the necesaary resolution and prescribed forms with income tax dept before the due date of filing the return.


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