The company has received goods of Rs.300 lacs from the government towards the cost of plant and machinery
1. is it a financing activities or investing activities
2. will your answer be different if the government had contributed the same amount towards equity participation instead grant for plant and machinery
Question is pertaining to AS
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Government grant and cash flow
Replies (1)
Non-Cash Transactions
Financing and investing transactions which don’t require cash or cash equivalents mustn’t be included in the cash flow statement. Those transactions must be presented elsewhere in financial statements in a way which gives relevant information about such financing and investing activities.
As per AS 3
Not applicable for non-cash transaction
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