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Purchase of fixed assets from restricted funds

Charity funds - fixed asset purchases

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Got a charity client who received £10,000 of donations towards the purchase of a minibus. The charity can use the minibus for its general charitable purposes i.e. there are no restrictions on the ongoing use of the asset.

In the accounts for the period, my plan is to show this as restricted income, but then show a transfer to a designated fixed asset fund, against which the ongoing depreciation charge will be offset.

Does this sound reasonable? Or should I just show it as income in the designated fund as it all occurred within the period? I prefer, personally, to show it initially as restricted, as it perhaps more reflects reality - it was never at the trustees' discretion what the income could be spent on. 

 

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By Monsoon
19th Oct 2017 12:29

As an income line, it's restricted funds. Cr Restricted income, Dr bank
Then it's Cr bank, Dr Asset as normal.
And then depreciate as normal.

I don't believe the ongoing depreciation etc has to be shown in respect to restricted funds, just that the income account is restricted, and documentation to show it's been spent as intended.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
19th Oct 2017 12:29

Also, apologies for putting the credits first. I clearly need more tea.

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By WhichTyler
19th Oct 2017 12:52

It should go to a restricted fixed assets fund, rather than designated.
so
receive cash
Dr bank
Cr Restricted van appeal fund

buy van
Cr bank
dr fixed assets (b/s)
Dr restricted van appeal fund
Cr Restricted fixed assets fund

depreciate van
Cr fixed assets (b/s)
Dr Restricted depreciation (p&l) (goes to restricted fa fund at year end)

this way the bs value of the asset matches the value of the restricted FA fund

You may be able to argue (depending on the terms of the gift) that the charity could sell the van immediately after buying it and do what it wants with the proceeds. I n which case the FA fund would be designated

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