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ACCOUNTING STANDARDS - 12
ACCOUNTING FOR GOVERNMENT GRANTS
Applicability: Mandatory for all enterprises with respect from 01/04/1994.
Government Grants are assistance by government in cash or kind for past or future compliance
with certain conditions.
Government grants may be received in following ways.
Grants related to acquisition of fixed assets
Grants related to revenue
Grants related to promoter’s contribution
Grants related to compensation for expenses
Government Grants should be recognised
Where there is reasonable assurance that the enterprise will comply with the conditions attached
to them; and The grants will be received.
Amount of Grant:
Monetary Grant: Amount earned should be the value of grant.
Non- Monetary Grant:
Where grants are given at concessional rate, then such assets are accounted for at their acquisition
cost.
Where grants are given free of cost, then such assets are recorded at nominal value.
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