Laxmikant agrawal (Head Of Audit Section) (52 Points)
19 January 2011hi freinds i just want to know the treatment or accounting enries of subsidy received for entire project like for fixed assets & working capital specially for working capital.
Whether subsidy received for working capital will be treated as revenue income.
Ajay Kumar
(CA)
(279 Points)
Replied 21 January 2011
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.
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