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CBSE Class 12-commerce Answered

In NPO que 6 in case I why we r not add pavilion in progress of rs.6,00,000 in capital fund.   But in case II and case III why this amount is adding in capital fund. 
Asked by Smitakhadayate20 | 24 Jun, 2019, 06:51: PM
answered-by-expert Expert Answer
In case I, there is no specific donation or fund available for the construction of Pavilion. Therefore, the expenditure is incurred out of the general fund or total capital fund available with the NPO and is not considered as Restricted Fund.
 
In case II and III, there is a specific fund for Construction of Pavilion and therefore, it is known as Capital Project Funds. These funds are also shown on the Liabilities side of the Balance Sheet. Donation and other receipts to acquire or construct specific fixed assets (such as, donation for construction of pavilion) or to carry out a specific project of capital nature are shown in the separate fund account. Treatment of receipts and expenditure relating to the fund can be understood with help of following example.

Example: Donation for Building Fund

 

Liabilities

 

Amount

Rs

Assets

Amount

Rs

Capital Fund

8,00,000

 

Construction of Building in progress

2,00,000

Add: Construction of Building in progress

2,00,000

10,00,000

 

 

 

 

 

 

 

Building Fund

7,00,000

 

 

 

Donation

1,00,000

 

 

 

Less: Construction of Building in progress

(2,00,000)

6,00,000

 

 

 

 

 

 

 

 

 

 

 

 
Answered by Surabhi Gawade | 25 Jun, 2019, 10:11: AM

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