Accounting of Govt Grant in aid-Assam Tea Estate

This discussion addresses the accounting treatment of a £5 crore Central Government grant received by an Assam tea estate for a new manufacturing plant. The core issue is whether to reduce the asset's value by the grant amount or recognise it as deferred income over five years. While the first method is common, the deferred income approach (Option 2) is recommended for better accuracy and compliance with AS 12, despite being less frequently used.