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Cash Accounting and Grant Income

I'm preparing a set of accounts for a registered charity. They are currently on cash accounting. During the year, they have decided to renovate part of their site in the form of a new kitchen and received a £10,000 grant.

Now, because they are on cash accounting, would this mean I should treat this as income? (My understanding would be; if the cost is going to be expensed to the P&L, then you treat as income and if its going to the balance sheet, I should put as an asset)

It would be nice to get peoples input on the above, and if possible, have something to support the answer. (We all know that clients like to challange accounting decisions!)

Kind Regards

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13th Jan 2018 20:55

When you say 'cash accounting', do you mean they prepare receipts and payments accounts (so a non company charity with income <£250k)?

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to WhichTyler
13th Jan 2018 20:58

If so, then the grant is a restricted receipt and the purchase of the asset is restricted expenditure. See https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

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13th Jan 2018 20:59

Exactly that. The problem is; there current earnings are circa. £245k so you can see why I need to be certain about where I classify the £10,000.

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13th Jan 2018 21:38

Even in accruals accounts, the grant would be income, so it looks you will be moving to a new standard...

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