As-12

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2011
Dear all,

A Company purchased a depreciable capital asset in 2007 and on the date of purchase there was no certainity regarding the receipt of government grant. However in 2010 it received government subsidy related to that asset. Now my question is that what will be the accounting treatment for subsidy received and whether the depreciation which has been claimed in earlier years will be added back in asset?

CA Parth Shah

CA Parth Shah (Expert)
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29 September 2011 As there was no certainity regarding receipt of grant when you were claiming depriciation, the grant which has been received afterwards will just go on reducing the cost of the same asset and same is covered under deemed short term capital gain u/s 50 if the same block goes into negative figure.

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2011 Thanx for the information

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CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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29 September 2011 well in acounting
you are required to deduct the amount of government subsidy from the cost of the asset i.e. WDV of the asset in the books

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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29 September 2011 further the depreciation will be charged on the balance AMOUNT prospectively

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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29 September 2011 you are not required to add back the previous depreciation which has been charged in the books