Rahul Gupta (CA Final Student) (1780 Points)
22 September 2008Hello Sir,
Our organisation has received an goverment grant on a depreciable asset. But from the last 2 years depreciation was provided on its original cost. now, after receiving the grant What would be the treatment in the books of accounts if I use capital approach and deduct the value of grant from Gross book value of the asset and please specify any alternate method if applicable?
Thanks in advance.
Regards
Rahul Gupta
CA Gaurav Gupta
(Practice)
(307 Points)
Replied 22 September 2008
just simply deduct the amt of grant from the block in which that asset falls and then see what remains in your block for dep. purpose.
Sachin Jain CA, CS, CWA
(Job)
(240 Points)
Replied 22 September 2008
Dear Rahul,
As per AS-12, u may show the depreciation by deducting it from the net value of asset appearing in the B.Sheet. (The dep. will be calculated on this net amount)
U may also show the gross value of asset in the Asset side along with the grant amount in the liability side. The depreciation will be deducted from the aaset side as well as from the liability side, (calculation will be done at the rate prescribed on the respective gross amounts ie. on gross value of asset as well as the amount of grant)
Rahul Gupta
(CA Final Student)
(1780 Points)
Replied 22 September 2008
Dear Friends,
Thanx for your replies.
But still i have a doubt.
actually depreciation was provided for 2 years, but as per AS-12 the depreciation should be charged on NET BOOK VALUE i.e after deducting grant received from the gross book value of the asset.
so what about the earlier depreciation provided? OR the depreciation on the asset should be provided prspectively i.e after deducting the grant received from now?
I m confused on these points.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
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