Query on Depreciation

AS 738 views 4 replies

 If subsidy is received from Government in relation t purchase of a fixed asset, will the depreciation be provided on cost of machine less subsidy amount or the full amount?

Replies (4)

 if the subsidy is given only for purchasing the machine ,than u have to deduct the subsidy from cost and provide depreciation on the resultant figure.

Dear Saket,

There are two treatments specified in AS-12 regarding this case:-

1) Credit the amount of subsidy in the asset A/c & Depreciation to be provided on Net amount.

2) Subsidy is credited in separate A/c which is amortized over the life of fixed asset by transfering the amount of subsidy to profit & loss a/c in proportion of depreciation...Neddless to say that in case Depreciation will be charged on the actual cost of Fixed asset..

 amir had hit the core....

 i think there is no query  now. Amir describe the good point and solve the query


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