multi year grants

[sugarloafmolly]

Hello,
i am trying to figure out how to correctly input grant money that we received in 2008. The money is for use in 2009 also. The P&L shows the income only in 2008 (that's when we received it). But we will be using some of it in 2009 against expenses. How do I correctly show this in a P&L?
Thanks, MT

[songcon]

Hello,
i am trying to figure out how to correctly input grant money that we received in 2008. The money is for use in 2009 also. The P&L shows the income only in 2008 (that's when we received it). But we will be using some of it in 2009 against expenses. How do I correctly show this in a P&L?
Thanks, MT

A multi year grant should be posted to income only in the amount allocated for the current year, the balance should be to deferred income, a liability account. Assume that $100,000 is allocated to 2009 income, prepare a journal entry to reclassify the 100K as deferred income ( debit income, credit deferred income) for 2008.

In 2009, create a reverse entry for this.

[sugarloafmolly]

thanks. I'm not very good with journal entries so I have another question. Since I have many different grants in sub accounts, should I make a deferred income account for each or just put all sub accounts in to one deferred income account and then separate out the amounts for 2009?
You can tell I'm not an accountant!
Thanks, MT

[songcon]

thanks. I'm not very good with journal entries so I have another question. Since I have many different grants in sub accounts, should I make a deferred income account for each or just put all sub accounts in to one deferred income account and then separate out the amounts for 2009?
You can tell I'm not an accountant!
Thanks, MT


Yes, that's how accounting works. You combine the numbers to one but always have the detail to back up your numbers. The deferred liability is not much different than an account payable which combines the total amount that you owe the various vendors at a specific point in time.

Cheers,

songcon