Accounting of govt.grants
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 May 2011
Sir,
Please advice me about accounting treatment of govt.grants and relavent Accounting Standard.
Please advice me about accounting treatment of govt.grants and relavent Accounting Standard.
14 May 2011
There are two approaches.
1. capital approach under which grant is considered as part of share holders funds.
2. income approach in which grant is taken as income over one or more periods.
Conditions to be full filled are more particularly described in Accounting standard-12.
However for income tax purpose grant should be reduced from the cost of the asset if it is capital asset based grant vide explanation 10 to section 43(1) of the Income tax Act,1961.
1. capital approach under which grant is considered as part of share holders funds.
2. income approach in which grant is taken as income over one or more periods.
Conditions to be full filled are more particularly described in Accounting standard-12.
However for income tax purpose grant should be reduced from the cost of the asset if it is capital asset based grant vide explanation 10 to section 43(1) of the Income tax Act,1961.
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