TaxTMI 
TaxTMI 
Depreciation Treatment on assets received in kind for specific purpose (Corpus donation)
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....epreciation Treatment on assets received in kind for specific purpose (Corpus donation)<br> Query (Issue) Started By: - PRIYAM KHAMBHATA Dated:- 16-8-2026 Last Reply Date:- 16-8-2026 Accounting - Auditing<br>Got 1 Reply<br>Companies Law<br>Respected Sir Whether depreciation on assets received in kind for specific purpose would be adjusted against the respective Donation Fund - corpus fund, inst....
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....ead of being charged to the Income & Expenditure Account, Please guide me, what would be corrected for accounting standards. Thanking Reply By Sanjeev Agarwal: The Reply: Accounting conclusion For an asset received in kind as a corpus/specific-purpose donation, the preferable accounting treatment is to recognise depreciation as an expense in the Income & Expenditure Account, rather t....
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....han directly reducing the Corpus/Donation Fund. The accounting logic is: • The asset is recognised as a fixed asset at its appropriate value. • Depreciation represents systematic allocation of the asset's depreciable amount over its useful life. • Accordingly, depreciation should be charged to the Income & Expenditure Account, with correspondi....
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....ng accumulated depreciation reducing the carrying amount of the asset. • The fact that the asset was originally received against a specific/corpus donation does not, by itself, justify debiting depreciation directly to that fund. Fund accounting The Corpus/Specific Purpose Fund may continue to be shown separately, subject to the donor's terms and the entity's accounti....
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....ng policy. A separate fund adjustment may be considered only where the governing document/donor restriction and the applicable accounting framework specifically support such presentation. Importantly, "specific-purpose donation" and "corpus donation" should not automatically be treated as synonymous. Under the Income-tax Act, 2025, a corpus donation requires a specific direction from the donor ....
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....that it form part of the corpus and compliance with the prescribed investment/deposit condition. Tax distinction This should also be separated from tax treatment. The Income-tax Act, 2025 specifically restricts depreciation as an application where acquisition of the asset has already been claimed as application of income. That tax rule does not mean that depreciation should be omitted fro....
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....m the books or directly charged to the Corpus Fund. Recommended accounting: Depreciation Income & Expenditure Account Accumulated depreciation reduction from asset carrying value Corpus/Specific Fund retained separately, subject to its terms. Conclusion: Strong position, subject to the exact donor deed, applicable accounting framework and the entity's established fund-accounting....
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.... policy.<br> Discussion Forum - Knowledge Sharing ....