As-12 doubt............................

If you reduce from the cost of asset, such an asset would be shown at lower value.

So in case you need your asset to be reflected at actual value then recognise grant seperately (i.e defer it)

It is considered in capital reserve only if its in the nature of capital contribution.

Montary grants received are two types.One is contribution towards Revanue I.e revanue nature of grant credit to Income and expenditure account. Whereas in case of capital grant received towards the Specific asset purchase/acquation than cost of asset need to be reduced to that extent. If capital grant are of general in nature it should be credited to capital and amortised in P& L accordingly. Hope it will help to clearified your doubt.

Hi Celiena Goel

Grants related to non-depreciable assets are credited to capital reserve , as there is usually no charge to income in respect of such assets.

However, if a grant related to a non-depreciable asset requires the fulfilment of certain obligations, the grant is credited to income over the same period over which the cost of meeting such obligations is charged to income.

Correct 1 !!! all

1. Cr to P&L

2. Reduce Asset value

3. Keep as reserve and depreciate

Answer for ur Q,  If the asset is non depriciable n there is a obligation attchaed to it which requires expenditure to be incurred then treatment of grant is to be done on deffered basis....why is it so?

because an obligation is attached.

There was Some grant recd by govt co from grant and it is treated as Receipt in P&L; abut some portion of it is still in Balance sheet  can any one explain it for me.

Thanks in Advance

Vinoth