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Capital Idea?

Can a donation be capitalised?

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I've always treated donations received by a yacht club as revenue items, and small outward donations the same. Now they've made a large donation towards a capital project which will benefit the whole community as well as the club. This has reduced the excess income for the year to a very small figure!

Are there any grounds for capitalising the donation?

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By Frazzle1
14th Sep 2016 12:19

Look at what you have after the donation to determine the treatment - who will 'own' the asset after the donation?

If it is the Yacht club (eg - a playframe, which will be for all the community to use), then I would show as an asset.

If it is a contribution to part of a new village hall, then the yacht club will not have an asset so it is a revenue expense.

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By TerryD
14th Sep 2016 13:34

Is the Club a Registered Charity or some form of incorporated organisation? Or is it just a simple non-incorporated members' club?

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By Norma Stitz
14th Sep 2016 14:03

Yes, Easily. See below.

DONATION. Job done.

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By The Grammar Police
14th Sep 2016 16:00

No asset will result from the capital project. The club is a members mutual, not a charity, though obviously charitable as the donation is being made to a registered charity.

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