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Ind-AS 20: Accounting for Govt. Grants & Disclosure of Govt.…
Ind-AS 20: Accounting for Govt. Grants
& Disclosure of Govt. Assistance
Meaning
Govt.
Local, State, Central, International (Foreign)
Grant
Financial assistance provided by Govt to entity on
fulfillment of certain conditions attached to it
Type of subsidy
Scope
Monetary Grants
Grants for Assets
Grants for Expenses
Grants for Setup of New Business
Non-Monetary Grants
For assets
Forgivable Loans
Recognition on Accrual Basis
It should be certain that entity will fulfill all related conditions
It should be certain that ultimate collection will be made by entity from Govt.
Otherwise recognise on cash basis
Accounting
Monetary Grants
Grants for Assets
Depreciable Assets
Transfer to deferred grant at time of recognition
At B/S date, deferred grant should be amortised in SOPL on the basis of method of depreciation of related asset
Refund of grant - Debit unamortised balance (Deferred grant) and then amortised balance (SOPL)
Non-Depreciable Assets
Transfer to deferred grant at time of recognition
No condition - Recognise as income immediately
Conditions - Recognise as income on fulfillment of conditions
Refund of grant - Debit unamortised balance (Deferred grant) and then amortised balance (SOPL)
Grants for Expenses
No condition - Recognise as income immediately
Time period - Allocate grant over the period systematically
(equal to actual expenses)
Past expenses - Recognise as income immediatley
Grants for Setup of New Business
No condition to continue business for specified time period - Recognise as income immediately
Business is to be continued for a minimum specified period -
Grant is deferred till restricted period and thereafter transferred to SOPL as income
Non-Monetary Grants
For assets
Record assets at fair value
Grant = FV - Discounted Price
Treatment of grant based on nature of asset
Forgivable Loans
Loans at concessional interest rates
Calculate FV of loan (PV at market rate)
Grant = Actual Loan - FV of Loan
Difference between actual interest and market interest is amortised in SOPL
If loan is taken for acquisition of assets
then deferred grant is amortised in SOPL on the basis of depreciation of asset
Out of Scope
Grants related to Biological Assets
In-AS 41
Tax rebates such as tax deductions, exemptions etc.
Govt. participation in ownership of entity
Disclosure
Accounting policy
Method of presentation in FS
Nature and extent recognised in FS
Unfulfilled conditions and contingencies recognised
Indication of other forms of Govt. assistance from which entity has directly benefited
AND