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!)