Accounting Treatment of Depreciation in respect of acquired Fixed Assets on Govt.Grant/Subsidy in Non profit organisation

[PRIYAM KHAMBHATA]

Respected Sir

My client is Non Profit Organisation, having Section 8 Company Liscence. It had received Government Grant / Subsidy Rs.1,00,00,000 for acquisition of Fixed Assets of Rs.1,50,00,000. Govt. Grant / Subsidy has standing under the Liability side and Assets showing the Fixed Assets.

How would be passed depreciation accounting treatment for the year under consideration (Fy 2025-26) as per the Accounting standard or ICDS and is there any impact in Income and Expenditure Account.

Thanks

AI Summary

Government-grant-funded fixed assets require assessment of depreciation treatment and its effect on a non-profit entity's income and expenditure account.
Depreciation treatment is queried for fixed assets acquired by a non-profit Section 8 company partly through a government grant or subsidy. The grant is recorded as a liability and the full asset cost is recognised. The issue concerns treatment under applicable Accounting Standards or ICDS and the resulting effect, if any, on the Income and Expenditure Account.