Grant received by Municipality

The corporation received a $5,000 grant from their Municipality.
No conditions other than to be used for the intended purpose - supplies and a nominal amount for equipment ($1,000.00).

Does anyone see an issue with this grant being entered in Other Revenue GIFI 8230 (*other revenue) or GIFI 8242 (Subsidies and grants)?

The way I see it is there are two options

  • Recognize the $5,000 as Other Revenue

  • Alternative treatment - for the portion of the grant going to equipment - decrease the cost base by $1,000.00 (On the Additions and Dispositions workchart enter $1,000 under government assistance to lower the depreciable amount by $1,000)

Therefore $4,000 to Other Revenue and decrease cost base of equipment $1,000.00

Any thoughts on this?

Have reclassified this from T2 to Taxtopics…

May I suggest that the original poster, instead of asking this kind of question on this forum, instead upgrade his accounting and tax knowledge…

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@NiceGuy the second option is correct

@BertMulderCGA kind of harsh… Not everyone has letters behind their names.

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Agree on both counts. Everyone needs to learn somewhere, somehow. If you haven’t run across something, the best thing to do is ask people who have…and is better than just guessing. (Whether it’s appropriate that someone asking those kinds of questions should also be providing tax advice is a question beyond the limits of this forum.)

My general GIFI comment though is that many large (and small?) CPA firms just fill in the totals (which are required) and no details whatsoever.

Classification in the GIFI is pretty non-standard. Put stuff where it fits, at the detail level you are comfortable with.

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Mr. NiceGuy, feel free to post any question regarding accounting matter in this forum, I believe accounting- taxes- Financial Statements -Software is connected and doesn’t matter about your background or studies, nobody here in this forum or anywhere should presume that has all the knowledge regarding Accounting, I have been practicing accounting 25 years and still learning every single day…
There are typically three types of gifts-in-kind: Tangible and intangible, use of the property, and personal services. Tangible or intangible property refers to donations of stock, cars, clothing, supplies, etc.
I believe Grant is related to income and option 2 is the best in your case.
Cheers

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Let us stay away from ad hominem attacks, on this forum and everywhere… It is not about letters behind names. I came up through the ranks, and learned the hard way, not by someone gifting me a designation…

The important thing is not practicing beyond your knowledge level.

Forums such as this forum are not designed to ask elementary tax and accounting questions. The elementary education should be done by taking tax and accounting courses, or perhaps asking your superior at the firm you are working for.

The main purpose of this forum is for items related to Taxycycle and Doxcycle. On those programs, ask any questions or help with issues that you have.

On tax and accounting issues, use the ‘tax topics’ section, and please, limit yourself to questions on unusual or difficult items that you yourself have spent some time on researching so that you have a grasp of the issue you are dealing with.

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Chiming in from TaxCycle here.

Just to be clear, this forum welcomes topics on accounting and tax questions, even if they are basic to some of the more experienced preparers. Questions are not limited to TaxCycle and DoxCycle usage either (although, we do appreciate putting those topics in the Tax Topics category). This is meant to be a safe place where ALL preparers can ask questions and we hope that the more experienced will assist when they feel it is appropriate.

@NiceGuy Thank you for posting the question and please keep participating. (@dklassencga Thanks supporting too.)

@BertMulderCGA if you don’t want to answer a question because you feel it is too basic, leave it there for someone else to address.

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Maybe we need a “bookkeeping and accounting questions” category.

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Besides the GIFI treatment, I think you need an election for the $1,000 under 13(7.4) to give effect to your second bullet. Otherwise the $1,000 potentially will be included in income in the year it was received, which puts you in the first bullet.

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Good catch @echan - I have a peculiar client for whom this is a need almost every year.

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The IPBC (Institute of Professional Bookkeepers of Canada) Forum eventually split into five.

General
GST
Tax
Sage
QB

At first this segmentation stream-lined the topics. Over time it seemed to contribute to the declining use of the IPBC Forum along with the rise of several popular bookkeeping Facebook Closed Groups. These FB groups seem to be more cloud apps and practice management focused.

With notable exceptions of a few who are active in both TaxCyle and IPBC, many experts stopped contributing. Some retired. Some simply got tired of posting the same answer over and over again.

Right now I don’t know of a more active or more informed bookkeeping and tax Forum right now than TaxCycle’s. Whatever TaxCycle decides I really hope that this Forum will remain active and supportive.

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Thanks @Arliss I created a Accounting and Bookkeeping Questions category as you suggested. Good suggestion.

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thank you everyone for your input!