[kathy1011]

We are a nonprofit company. Can someone walk me through how to enter a grant? Please include journal entries where possible. The grant is $10,000 in cash to be used for building improvements.

Please start with the deposit process and then how to enter the expenses. One item I read says to directly offset expenses to a grant expense account and not through a regular expense account. Also, I'm assuming that we would not be able to depreciate the fixed asset since a grant is paying for it. Is that true?

[Fidget1]

You don't mention what sort of improvements, so it depends on what exactly the grant will be spent on. In general either the grant will go towards items that are capitalised, or it will go towards items that are not capitalised. Also, grants tend to have conditions attached to them, so depending on what they are will decide on exactly how you account for it, but the general concept of matching income & expenditure applies.

If the grant is for say, fixtures and fittings that will capitalised, then it's treated differently from a grant for things that aren't going to, or cannot, be capitalised.

But without knowing which one it is, it's difficult to advise on how to journal it through to your income statement & balance sheet.