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sir if we record grant as deffered income
sir at repayment the double entry is
if repayment at principal amount
DR deffered income
CR cash/bank account
DR profit and loss
sir the profit and loss is DR with the amount already recorded or amortized as income in P/L
sir for example total grant is 100 and useful life is 5 yrs
at end of 2nd year the grant is amortized 40 but if we repay grant now then double entry becomes
DR deffered income 60
DR profit and loss/income 40
CR cash/bank 100
sir is my concept is correct regarding this please help meIn this post you have called me “sir” 5, (yes FIVE) times
Please, it’s either “Mike” or nothing
In addition, each and every one of your posts includes a grovelling plea at the end … “sir, please help me, please” or similar
Syed, there is no need for this! Simply something like “Please could you explain the following?” would be totally sufficient
Ok?
Now, your question……. Yes, your thinking IS correct. Beware! If this 100 grant was received in respect of some TNCA, then the act of repayment will mean that we have been under-charging depreciation on that related asset and you will need to make an adjustment for that under-depreciation
Ok?
if grant is to be repaid at more then principal for example the grant is 100 and useful life of asset is 5 then after two year grant is 60 and 40 is amortized and recognised in profit and loss statement
but now we have to repay grant at 120 then entries are
DR deffered income 60
DR profit and loss 60(40+20)20 is additional payment on repayment and treated as loss
and recognised in P/L statement
CR cash/bank/payable 120
is my concept is correct
mike as you previously said that we should understate depreciation
this understatement is under cost of asset less grant method not in deffered method
and what is double entry for thisI’ve just answered the first part of this post on another one of yours.
You’re correct about the undercharging of depreciation being applicable to the alternative treatment of government grants.
“What is the double entry for this?” What’s “this”?
no i asked different first example grant is repaid at principal now in this situation grant is repaid at 120 not at principal of 100 and i made double entry for this above and i am asking is this correct
and secondly when we make adjustment to depreciation we made double entry
DR depreciation expense
CR accumulated depreciation
is i am correct
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