treatment of project subsidy

Hi,

As per AS 12 Government Grants, Subsiddies received as working capital should be treated as revenue income in the year of receipt.

As regard to Capital receipt you have two options.

(a) Treat it as capital receipt & Credit to Asset account, So that the value of asset is brought down or

(b)  You can Treat it like Preliminary expenses & write off over a period of years.

Hope you are cleared.