We have received Central Govt Grant in aid Rs.5 Cr towards setting up manufacturing plant in Assam. There are 3 options- either reduce asset value by grant amount or show Grant in accounts & Charges of over 5 years.
In case of 1 st option, Assets value is purposely reduced- not a true reflection. All follow 1 st. Kindly guide.
Regards
You may follow Option 2 (deferred income) even though “everyone follows the first method.”
✔ It is fully compliant with AS 12 and provides a more accurate picture of the fixed assets.
✔ Option 1 is simpler but understates asset values.
Many thanks. How this will be dealt with in cost audit.
Please guide.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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