Accounting standard 12

1. GOVERNMENT GRANT Presented by, Yogita ACCOUNTING STANDARD : 12

2. Recognition of government grant The enterprise will comply with the condition attached to them. The grant will be received.

3. Kinds of government grant Monetary govt. grant. Non monetary govt. grant.

4. Non monetary govt. grant Grants are given at concessional rate, then such assets are accounted for at their acquisition cost. Grants are given free of cost then such assets recorded at nominal value.

5. Monetary govt. grant grant related to depreciable fixed assets Grant is shows as deduction from the gross value of assets .when the grant equal to the cost of assets, at nominal value. Grant treated as deferred income.

6. Grant related to non depreciable fixed assets Grant is shown as deduction from the gross value of assets when the grant is equal to the cost at nominal value. Condition attached to grant are fulfilled, credited to capital reserve account.

7. Grant related to revenue Should be recognized in profit and loss account over the period to match them with related costs. Either be shown as ‘other income’ or be deducted from the related expenses. A grant is to be received as compensation for expenses or losses already incurred, should be recognized in the profit and loss of the period on which it becomes receivable as extraordinary items(AS- 5).

8. Refund on govt. grants Refund of grants related to revenue. Refund of grants related to specific assets.

9. Disclosure The accounting policy adopted for govt. grants including the methods of presentation in the financial statement. The nature and extent of govt. grants recognized in the financial statement.

10. Significant different with IFRS/ IAS-20 and US GAAP (SFAS-16) AS-12 does not state about fair value measures of non monetary grants whereas IAS-20, fair value at the time of initial recognition and US GAAP recognize at fair value. Grant in the nature of promoter contribution is credited to capital as per AS-12, if however as IAS-20 such grant should be treated as different income. refund of grant is treated as extraordinary items as per AS-12 whereas in IAS-20 it is treated as a change in estimate.