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
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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