Home › CA Foundation › accounting › Financial Statements of Not-for-Profit Organisations › Government grant for purchase of equipment ₹1,00…
Government grant for purchase of equipment ₹1,00,000 received and used to buy equipment costing ₹1,20,000. The grant is:
ACredited to I&E directly
BSubsidy ignored fully
CDebited to equipment account
DCredited to a specific fund
Answer & Solution
Correct answer: D. Credited to a specific fund
1. Specific government grants for capital assets are credited to a 'Grant from Govt' fund.
2. The equipment ₹1,20,000 is shown as asset.
3. The fund is amortised over the life of the asset (alternatively shown as deduction from asset cost).
_Source: ICAI BoS Foundation Paper 1, Ch 8 "NPO", §3.1 government grants_
Related questions
Treatment of legacy donation received specifically for a charitable activity:Endowment fund of ₹2,00,000 is set up. Income from this fund (interest received) ₹15,000. NPO incurs ₹15,000 on books for library. These books are added to:Why is R&P alone insufficient for NPO performance assessment?Subscription received during year includes ₹4,000 for next year. I&E should include:Honorarium of ₹10,000 paid to a speaker is treated as:Stationery purchased ₹8,000; opening stock ₹2,000; closing stock ₹3,000. I&E debit:Opening assets ₹2,00,000; opening liabilities ₹30,000; current surplus ₹40,000. Closing Ca