AS 12 Govt grants

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As per AS 12,  in case of recognition of grants for non depreciable fixed assets (when grants is received specifically for the fixed assets), the text reads as follows

'However, if a grant related to

a non-depreciable asset requires the fulfillment of certain obligations, the

grant is credited to income over the same period over which the cost of

meeting such obligations is charged to income. The deferred income is suitably

disclosed in the balance sheet pending its apportionment to profit and loss

account. For example, in the case of a company, it is shown after ‘Reserves

and Surplus’ but before ‘Secured Loans’ with a suitable descripttion, e.g.,

‘Deferred government grants’.

Now , in case a enterprise receives grant for purchase of land(non depreciable)with some conditions attached, with no specific time limit given for fulfillment of conditions. During which period will the enterprise defer their income from such grants

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AS 12: Accounting For Government Grants

hello dear,

income will be amortised on the basis of reasonableness. the enterprise will estimate the time over which it will use that land.

I agree with Rakesh

it should be treated as capital reserve


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