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Accounting treatment

I have an accounting treatment query which I have asked numerous Chartered Accountants who all manage to give a different answer. The question appears fairly simple though and that is:

A company is gifted £1m worth of assets which is material to its balance sheet - what is the accounting treatment??

The favourite approach appears to be to

Dr Fixed assets with the fair value of the assets
Cr Deferred income

And amortise over the life of the assets. Hence this takes a SSAP 4 approach.

Any opinions??

Paul Clarke

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10th Dec 1999 11:53

I concur with the treatment stated and have in fact used that method in the past for companies (limited by guarantee)with objectives that might be described as "charitable". Indeed, I understand that the deferred income approach is commonly used by charities.

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21st Dec 1999 12:11

Who made the gift.......
Martin,

Thanks for your answer.
The gift was made from outside of the group or shareholders - in fact from a public sector body. I think in this case the solution suggested is correct as agreed in the first response from Amanda.

Paul

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By neileg
13th Dec 1999 10:19

Flippant comment
Ask ten accountants the same question, and you'll get ten answers. And they'll all be correct!

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