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CS Professional · CSR and Social Governance · Financial and Non-financial Reporting of Different Non-Corporate Entities

Nirmaan Charitable Trust received a legacy of Rs 5,00,000 and a general donation of Rs 80,000 during the year. The legacy is to be kept intact as per the testator's instruction. How should these be treated in the final accounts?

The legacy of Rs 5,00,000 is added to the capital fund because it is to be kept intact, while the general donation of Rs 80,000 is a revenue receipt credited to the Income and Expenditure Account.

  1. ABoth credited to Income and Expenditure Account
  2. BLegacy added to capital fund; donation credited to Income and Expenditure AccountCorrect
  3. CLegacy credited to Income and Expenditure Account; donation added to capital fund
  4. DBoth ignored as they are non-recurring

Explanation

Legacies and donations for a specific purpose or to be held as corpus are capital receipts and go to the capital fund. General donations are normally treated as revenue income and credited to the Income and Expenditure Account. Option 0 wrongly treats the corpus legacy as income.

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