Journal entry

Say the Grant is received for Non-depreciable assets

Case 1: No obligation attached

Bank Account Dr.      Rs. XXXX

To Fixed Assets                         Rs. XXXX

Case 2: Obligation attached

Bank Account Dr    Rs.XX

To Deferred Govt. Grant          Rs.XX

(In this case the entire amount is divided by the no. of years to which obligation is to be undertaken)

jiju sir

why are we crediting fixed assets?

please explain the first entry

shivani

Dear Shivani,

Case 1: No obligation attached

Bank Account Dr.      Rs. XXXX

         To Fixed Assets                         Rs. XXXX

Crediting Fixed Assets here doesn't mean writing off Fixed Assets. whereas in this entry value of Fixed Assets is being reduced by the amount of grant received as no obligation is attached while providing Grant.