Capital assets for CSR
Atharv Sankliya (1356 Points)
08 February 2023
does capital assets held by company for the purpose of CSR activities can be recorded as PPE ??
7 Replies
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 08 February 2023
No, not unless that capital asset is in use by the company.
If it's not in use, create an asset as it's not inventory.
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 08 February 2023
By the way CSR activities are defined. When you want to do social work from your 3 years average profits, it must be allowed. Supposing if your a builder and wants to lay roads, you can do it at your own cost by using your equipment and labor without a profit margin. And it doesn't fall as a loss.
Atharv Sankliya
(1356 Points)
Replied 09 February 2023
No i am asking if a company has school for CSR does it is recorded as PPE?
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 09 February 2023
It's part of a group. Besides, it can be recorded as PPE.
During construction 3 years average profits into 2%
Dr. Retained earnings 200
Cr. CSR liability 200
Dr. School 200
Cr. Bank 200
And a reconciliation is required between retained earning, bank and CSR liability. It will automatically happen in general ledger
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 09 February 2023
https://www.caclubindia.com/articles/csr-reporting-creating-a-liability-for-an-asset-26864.asp
What happens as per the scheduled acts is, school must be expenses. But I'm trying to find a way here.
Maybe
Dr. Reserves
Cr. CSR liability
And
Dr. CSR liability
Cr. Bank
Finally
Dr. Asset
Cr. Equity??? Because assets - liabilities = equity. It can be done like that if company doesn't bankrupt lol
Yasaswi Gomes new
(Finance )
(4545 Points)
Replied 09 February 2023
My rational explanation is
Every transaction tallies assets and liabilities through dual aspect
In the same way equity is the residual interest in net assets per transaction.
So you can create a head in equity like ' 'ownership interest' because we have interest in an asset which is a liability to the company.
We can amortise building without tax exemption and retained profits will reduce and we can
Dr. Reatined earnings
Cr. Ownership interest
This both the building and ownership interest will derecognise properly.
Atharv Sankliya
(1356 Points)
Replied 09 February 2023
Sir if a coal mining company has schools/hospital for charity purpose how it is recorded in its balance sheet???
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