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

Nirmal Charitable Society sold a piece of old furniture, book value Rs 20,000, for Rs 26,000 and a consumable stock of stationery was used during the year. How should the Rs 6,000 difference be treated in the NPO's accounts?

The Rs 6,000 gain on the furniture sale is ordinarily shown as profit on sale of an asset in the Income and Expenditure Account, unless a specific entity policy or donor condition requires different treatment. It is not a liability and is not ignored.

  1. ACredited to the Capital Fund directly in all cases
  2. BShown as a profit on sale of asset in the Income and Expenditure Account, unless the entity's policy or donor terms require otherwiseCorrect
  3. CIgnored since NPOs cannot make gains
  4. DShown as a liability to the Trustees

Explanation

Gain on disposal of a fixed asset is ordinarily taken to Income and Expenditure. A different treatment applies only if a specific policy or donor condition requires it, which is not stated here.

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