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Non Profit org accounting

Sivaraman A R (.) (1040 Points)

15 June 2011

Can an NPO capitalies a certain percentage of annual membership fee by making a provision in law, by-law?

How to account 5 year membership fee? First to capitalise and then writeoff it by recognising as income over 5 years?

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5 Replies

Rajnikant Vadigoppula (CA, CS And CMA Final) (919 Points)
Replied 15 June 2011

annual membership fee cannot be capitalised.

life time membership fee can be capitalised.

membership fee of 5 years is received it can be treated as deferred income.

can written off over a period of 5 years as income

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CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 15 June 2011

Originally posted by : Rajnikant Vadigoppula
	annual membership fee cannot be capitalised. life time membership fee can be capitalised. membership fee of 5 years is received it can be treated as deferred income. can written off over a period of 5 years as income

yes agreed

Sivaraman A R (.) (1040 Points)
Replied 17 June 2011

So If an annual membership Rs 1200 is obtained on 01.01.2011 and the membership expires on 31.12.2011. How much should we show in IE for FY 10-11?

Rs 300 or whole 1200?

Shruthi (PCC Student) (111 Points)
Replied 17 June 2011

One basic thing i wanted to get clarified:

NON Profit Organisation never Prepare IE A/c. It prepares Receipt & Payment A/c which means its nothing but cash inflow and cash outflow during the year (i.e., Cash Book).

So you will 've to show entire Rs.1200 in Receipt side for the year 10-11 irrespective of the fact that only Rs.300 pertaining to the Quarter Jan 11 - Mar 11...

Its better to have cash book in mind or cash flow statement while checking accounts of NPO.

Guess i'm right...