16 December 2009
Refer AS-12 Accounting for Government Grants.
If capital subsidy is received which is related to depreciable fixed assets (generally it is so); then either it can be fully deductible from the cost of the asset
or
Capital subsidy may be treated as deferred income. This income is taken on some rational basis i.e. proportioning it during the useful life of the asset. Hence you can take this option.
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