28 September 2010
Hi Devendra, Grant is covered under AS 12. The grant is related to fixed asset has two alternative treatments. First it should be presented in the balance sheet by showing grant as a deduction from the gross value of the asset.Second alternative is : (a) Grant related to depreciable fixed asset can be treated as deferred income. If treated so, deferred income should be recognised in P/L A/c on a systematic and rational basisover the useful life of the asset in the proportion in which dep is charged. (b) If grant relates to non-depreciable asset ;ike land, the amount should be credited to capital reserve. However, if a grant related to a non-dep. asset requires the fulfillment of certain conditions, the grant should be deferred and credited to incomeover the period over which cost of meeting such obligation is charged to income. Regards, CA Shakuntala Chhangani
CAclubindia
