14 December 2013
There are 2 methods for accounting grants recd.
A. Amortising the grant during the life of the asset for which such grant was recd. by crediting p&l a/c. every year. In this case, bal. amt. it is to be disclosed below reserves and above loans in balance sheet.
B. Setoff the grant amount to the value of the asset and chatge depn. on the reduced value of the asset as per applicable rate.
Note: In case grant is recd. against a non depreciable asset, then it is to be treated as capital reserve.
Seems balance amount should be shown in 'reserves and surplus' as per revised schedule VI since an additional 'line item' in between 'reserves' and 'loans' can't be created.
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