AS 12

Accounting for Govt Grants

objective Apply to all 3levels
To prescribe the accounting treatments for government
grants
what are Govt Grants Gh
Govt Grants are subsidies cash incentives
etc recd
from Govt Govt agencies whether
Local national or international
Tan holidays are not ha
Govt Knut as equity in business
not GG Govt state or centra
municipalities World
Bank A D B etc
Recognition of 94 u n
GG to be recognised when there is
reasonable assurance that
The enterprise will comply with the
conditions attached to them G
Grants will be received

Types of Gout Grants

Non CI
monetary monetary Grants
Grants

F Related to Related
44 144recd O
depreciable
Assets
O
Non Depre
Assets
free ofcost i e assets t t
t Casset for concessional A 94 deduct A If condn
Record at rate from cost of44 are
Nominal 4 of Asset satisfied
Record the asset
value at the concessional B qq record
Cr to
i E low cost on heals Cap Res
e
of Acqh
or so 1 side G B If condos
are not
Land Alcoser Land Alc An
Arn mortise
To Pk Alc To Bank Ale fulfilled
Deferred 9 then
GovtGrant ammortise
over the
period
GG Recd of Revenue Nature forfulfilling and
99 Reed as part of sellingprice or part
of purchase price paid by Govt record
in PIL Al c enpenses
paid by Govt
GG Reed as Promoters contribution
96 credited to Capital Reserve to form
the
part of shareholders funds the
of Direct contr towards costCapital
This Grant Is not related to or of
any Project
asset this is for the
specific
overall project
These 99 Ave Bank Alc Dr

generally not to
capital Reserve Ale
generally I Cq tal es de
the
refundable
conditions are already fulfilled

Refund of Govt Grant

Conditions attached to the grant are not ful lled then the grant may
become refundable. If the conditions are ful lled then the grant cannot be
refunded.

Alcery for Refund of Granet

In case
monetary 99
Non
1
of
Refund not possible as we did
not 99 In form cash
getasset
any of
If any given for free the Govt may
demand the value asset
the
same in
full
case
of
asset given at
of
concessional rate

2 In case
of Depreciable Asset

a 94 deducted from cost of Asset

should be added back to the WDV
the asset e deep to be charged
of
on revised wDV wDV E Dep to be charged
will be revisedafterrefund
b 99 recd was shown as a Def
 I 99 d as hours of
Grant them at the Home of refund
the refund
adjust
unammortsed
against the
credit
deffered
balance
first if to Pl LAK such
q any encessamt

of refund charge
Refund will not affect WDV of asset
G the ant of Deph
Eg Mach 1000,000 GG 200,000
Dep 10 94 to be deferred
SLM

If Grant becomes in the 3rd year

at i E 100 ooo CE Mi E 160,000 or

Iii E 180 ooo Erfu E 200,000

Showing Alcing
Bls
Mach
Def 4G 200,000 1000,000
t lot Ammt 20,000 f Dep 10 100,0001

180,000 900,000
7104 Ammt Dep 10 100,000
160,000 800 ow
Refund 400,0001 60 ooo Ammt in the balanceperiod
Refund 160,0007 Nil
Refund 460,01 Nfl
Refund 460,000 Nfl
 PIL
Istyr TO 100,000 20
Depn By Def4G ooo

andyv To Dep 100 ooo Bey Def99 20,000

To Refund
20,000
of GG
To
Refund
of GG 40.000
journal
1st case Def GG Afc Dv 100,000
TO Bank Alc 100,000

2 ase_ Def GG Alc Dv 160,000

TO Bank Alc 160,000

3 rse_ Def GG Afc Dv 160,000

PIL Afc Dr 20,000
To Bank Alc 180,000

4thcase Def GG Afc Dv 160,000

PIL Afc Dr 40,000

To Bank Alc 200,000
 3
Refund of Revenue grants
a
99 to be should be
refunded
Dr to PIL Ah
or
charged
b there is Rev Grant
Ifthen any
the
Def 1st
adjust refund
against the Unam mortised Cr
balance
Al
Ee en cess
tfto Dvr
any
PIL c
Refund of 94 changed to PIL
is an entra ordinary item
4 Refundn of 99 Reed as Promoters
cont Dr the Refund ofGrant
to capital Reserve
Egg For 99 Def w r't Land I B

Ament 44 over the period of

fulfilling
the word The expense fulfilling
condn will be Dr to PIL Al e G
Cr will be given of
corresponding
49 Amm t so matching concept is
followed plc Me
To Eup for By Ammt
GG condn xx
of99 Xx
Disclosures
The following should be disclosed:
(i) the accounting policy adopted for government grants, including the methods of
presentation in the financial statements;
(ii) the nature and extent of government grants recognised in financial statements,
including grants of non-monetary assets given at a concessional rate or free of cost.
 2 In the Books 2 Ltd
of
Journal
hear I
fined asset Ale on Sooo ooo
To Bank Ale 5000,000
Being Erewed Asset purchased
 Bank Atc Ar 1000,000
To Deferred Govt Grant Afc 1 ooo ooo
l
Being Grant received for fined asset

Depreciation Alc M 900,0W

To Fined Asset Afc 900 ooo
5 ooo ooo Soo ooo

Dgson
Being charged
Deferred Govt Grant Alcor doo ow
To Ammortsation
of Grant Ale doo ooo
ooo
long
Being Govt Grant Ammortised
P L Al c Mr 900,000
To Depreciation Attoa 900 ooo
Plc Ale
Being Dep transferred
Ammortisation GrantAlem 200,00
TO PGL Afc of doo ooo
Being Ammovffsed Grant transferred
to Pf L Al c
 to l f L I c

clear 2
pass entrees 3 to 6 as it is
3 As per AS 12
Accounting for
government Grants grant w t to
refundable
r a depreciable

the ant the

Book value
of refund
aint to be
of Dep
charged will change
In this the
case refund of
will be added
Grant E 2 crores
Book
back to the value of
asset as it was earlier deducted
at the time of receipt
Book value before 2 2o x4
refund q
is 8
tiger
a

Wed sort alive

 i Revised Book value

dummeyrettos II'Iones
Revised Depot Ed
II Innes
0 In this the Refund
should ofbe
case
E 300 Lacs
Grant of added
debited or back to the
Book value the
as it was deducted of machinery
at the
time receipt
of
F WE Book 1500 3 oo
valvesting
as on
may Loo 4 20 Doyon
3
for yrs
E 614 4 Lacs

Revised Book value 614 4 300

after Refund of grant a E 914 a 40
Lacs
Deep will be charged at soy
W D V on the revised Book value
Qb 40 16
24
Dep
224 8
T
4 per

1h 8
a 16
164
32

32 8 z 12
a
2
 GG lb RA 40 Dep 401
Amrit 181 Doyon Id 4
8
16 24
T
a 8
Refund nil
24
T 8 PIL Ar

Def GG Afc ons

PL Dlc Ar 8
To Bank Ale 16

1st
L B s y

Def Rev D Banh Alcor Goo

600
Grant 600 Def Rev Grant
To

cutoff to
PIL KI 400 d
Def Rev GrantDrain
To PIL Al Soo

PIL Afc
y.tosalary 1434 9ankfian
I d
 Bls2

get'affaoo
w
off to Goo
PIL

4 Grant doo

PIL
To Purchase 120 By sates
Govt Grantfdofloo Customers xx
To
salary xx Govt grant xx

99Read xx By schoolboy
students 50
Govt Grant9951 10,000

Deferred Revenue Grant from Govt

i e
benefit will be derived for more
than 1 yr

g salary grant Reed E 600

for 34ns

Def Rev Grant should be

cut to PK over the period of
off benefit equally
 off en
g o of encfl equally
1 Bank Alc Dr boo
To Rev 600
Def Grant
L BIS PIL
Tosalangboo By Def
Def Rev Defter Rev
Loo
Goo grantee Grant
Grant
hooor
Hoff Goethoo
Rev Grant Draco
2
Def 200
7010 2 Ak
A 96 Deduct from cost of Asset
Eg Mach 5000,000 GGRecd 1500,000
BIS A Dep 10 WDV

Machine soooooo
99 Reed 4500,000
3500,000
10 Depth 350,000 3150,000
Dr PIL
TO 350,0W
Dep

Journal 3
94trd.to
e DAssetPwrchased G4AIc Dr
Asset Afc Dn To Asset Me
To Bank Alc
2 99 Recd
I 99 cel
Bank Ale Dr
To GG Alc

I B GG Recd should be treated as a

Def rred
Grant G WIoff in same proportion
of Dep Charged on the Asset
Mach E sooo ooo 94 Reed 1500
n
ooo
B Dep lo's WD
g
Def Grant 1500,000 Mach 5000,000
lot Ament 150 ooo Dep 107 500,000 4500 ooo
1350 ooo

To
Dep 500,000 By DefGrant
Ammt 150,000

350 ooo Dr

Journal Grant wloff in PIL

m
an
i ag ee 9ih.ii
To Bank Alc
 L

Def 94 Me

Haha
WDV 60
Dr 6
g Asset
Egon
Bank Afc
To 54
107
or Depn
W DU 48
1 44Refund'T Refund
To Bank 88
Dr Revised
g Asset w DV 8
Tom Dep4oy
Refund 79.2
0 As per AS 12 Accounting for Govt
in
Grant case
of refund of Grant
w r t depreciable asset which was deducted
the costasset at the time
from of of
refund the amount
of refund should
be added back to the book value the
of
asset q deep should be charged on the
revised book value
So in the
given case the refund
E 2 crores in 2002 03 Should be
of
added back to the book value of the
machine

Depn on Machine 2 E 2 Cr a
209 p
99
W DV machine 20 2 2 4
of 202 org E 10 Crores
for
Revised wow at the to 2 Grant
time of Refund Refunded
I 12 crores
Revised Dep to be 2.4 crore
chargedfrom dog o
Q.gs As AS 12 Accounting for Govt
per
in
Grant case
of refund of Grant
w r t depreciable asset which was deducted
the cost asset at the time
from of of
refund the amount
of refund should
be added back to the book value the
of
asset a deep should be charged on the
revised book value
So in the
given case the refund
E3 00 Lakhs in May 2004 Should be
of
added back to the book value of the
machine

Loy
W
of the Machine
DV 1500 300
as on 31 3 2004 W DU
Dep for 3 years
E
614,40 Lakhs

At the time of Refund

in 2004 the
May
awaaisyedsawzvaoj.IE II7oIITm

Dep 20 t w DU on the Revised w DU

shall be charged by company
ge by 1 any