Specifics are always tied to events and occasions, the donations received as such are hence dependable of the business type, industry the company is in etc., however, if there is an occasion your company does receive a donation, the treatment and disclosure requirements are still more or less the same. There are some special disclosure requirements for government grants and donations, but please consult your local reporting and disclosure framework guidance for it. With the following we are focusing on the accounting treatment. <\/p>\n
If the grant is just given out without any further conditions, the amount given is your income (note here that if it\u2019s for a specific investment or type of expense, it\u2019s always shown as a part of that investment (decrease) or expense (decreasing the expense in essence)). When you receive the money or it\u2019s more than probable you will obtain the donations and there are no conditions tied to it, you make the following entry:<\/p>\n
1.\tYou get to know of the donation to be received<\/p>\n
Debit\tOther receivables\t 500
\nCredit\tInvestment purchase \/ Operating expense \/ Other operating income (depending on the type of the donation \u2013 see above)\t 500
\n
\n2.\tReceiving the payment<\/p>\n
Debit\tCash and cash equivalents\t 500
\nCredit\tOther receivables\t 500<\/p>\n
In case you receive the money and there is not delay between you knowing of the decision and the actual payment, you skip the Other receivables entry and just recognize the cash received and credit either the investment acquisition, expense account or other operating income. <\/p>\n
If the grant or donation is in any way tied to conditions or requirements, the first recognition is done in the amount that probably will be paid out. However, if it\u2019s less than probable that the donation receiver will meet the conditions, the income is not recognized. Other than that, the entries are the same. <\/p>\n","protected":false},"excerpt":{"rendered":"
Specifics are always tied to events and occasions, the donations received as such are hence dependable of the business type, industry the company is in etc., however, if there is an occasion your company does receive a donation, the treatment and disclosure requirements are still more or less the same. There are some special disclosure […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,68],"tags":[],"class_list":["post-2771","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-16-donations"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=2771"}],"version-history":[{"count":3,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2771\/revisions"}],"predecessor-version":[{"id":2773,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2771\/revisions\/2773"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=2771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=2771"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=2771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}