Dear all,
If a company getting government assistance as cash every month to meet its expences of 70%,how we will account it?is it right to account as an INCOME.What about Capital approach.
Thanks in advance
Renjith
Maldives
Renjith S Nair (Accountant) (94 Points)
20 March 2012Dear all,
If a company getting government assistance as cash every month to meet its expences of 70%,how we will account it?is it right to account as an INCOME.What about Capital approach.
Thanks in advance
Renjith
Maldives
bcshettyco
(Chartered Accountant In Practice)
(65 Points)
Replied 20 March 2012
It is generally considered appropriate that accounting for government
grant should be based on the nature of the relevant grant. Grants which have
the characteristics similar to those of promoters’ contribution should be treated
as part of shareholders’ funds. Income approach may be more appropriate
in the case of other grants. If tax on profit has to be lowered then income approach be followed.
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