www.cachiranjeevjain.com Chapter 12 : IND AS 20 CGE ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURES OF GOVERNMENT ASSISTANCE (IND AS 20) | score: (@)_ Accounting and disclosure of Government grants. (b) Disclosure of other forms of Government Assistance. (i) |_ MEANING : (a)_Government Grants : These are Assistance from government. in the form of transfer of resources to_an entity for past or future compliance with certain conditions relating to operating activities (b) Government assistance : It is an action by Government Designed to provide economic benefit To specific entity or Group of entity Page 133CaP ECE) www.cachiranjeevjain.com @©)_Govt. Grant does not include : 1) Govt. assistance to which monetary value cannot be placed Example: Free technical | marketing advice by Govt. 2) _Normal trading transaction with Govt. Example: Identify whether IND AS 20 is applicable or not a) | Govt. Participation in ownership of an entity Not Applicable 4) _| 66 related to biological asset other than bearer plant _| Not Applicable ©) | 66 related to bearer plant Applicable @)_| Free technical advice from Govt. ‘Applicable 2) | Government Assistance to public at large Not Applicable 9 provision of infrastructure by improvement to the general transport ond communication network #) | Tox holiday, Investment tax credit, additional ‘Not Applicable] depreciation (Refer IND AS 12) Cil)| RECOGNITION OF GOVERNMENT GRANT : | GG should be recognised only when there is reasonable assurance that | + the grants will be received. £0 int of G6. iti , grant have been or will be fulfilled.Rue ce ol Coa Pe Ce) CV)| ACCOUNTING APPROACH FOR GOVERNMENT GRANT : Accounting approach for Government Grants Recognise and measure as per IND AS 109 ta Government Grant Amount of proceeds received Less : FV of loan as per IND AS 109 Amount of Government grant Bank account To loan payable To Govt. Grant )) Exception : In the following cases, Grant should be recognised in PL of the eriod in which it is received or receivable Ga) __GG received or receivable to compensate past losses/expenses (bh) _6G received or receivable as a reward for the purpose of giving immediate Financial support with no further related cost.www.cachiranjeevjain.com (VI)| REPAYMENT OF GOVERNMENT GRANTS + Repayment of Govt. Grant It will be accounted as changes in accounting estimate If GG transferred |_| If GG is treated as If 6G is deducted from| to P/L deferred income cost price of assets Asset account - Dr P/L account - Dr} || GG account Dr CUnutilized) | || To 4G payoble | || deterred GG Dr (Unamortised) [aa ”| sole PL Dr CAmortised) - To 6G Payable |} 66 payable - Dr Sea ead “ To Cash / Bank GG payable - Dr To Cash/Bank Vil) | GOVERNMENT ASSISTANCE - NO SPECIFIC RELATION TO OPERATING ACTIVITIES CAPPENDIX A TO IND AS 20) >The issue is whether such government assistance which are in the nature of promoter contributions is a ‘government grant' within the scope of Ind AS 20. CA Chiranjeev Jainwww.cachiranjeevjain.com Chapter 12 : IND AS 20 > Examples of such assistance are transfers of resources by governments to entities which: Ga) ___ operate in a particular industry; (b) continue operating in recently privatised industries; or (©) __ start or continue to run their business in underdeveloped areas > _In this regard, Appendix A to Ind AS 20 provides that government assistance to entities meets the definition of government grants in Ind AS 20, even if there are no conditions specifically relating to the operating activities of the entity other than the requirement to operate in certain regions or industry sectors. Such grants should therefore not be credited directly to shareholders’ interests and should be recognised in profit or loss on a systematic basis. VIN)| DISCLOSURE REQUIREMENT : The following should be disclosed: (@)___ the accounting policy adopted for government grants; (b) the methods of presentation adopted for government grants in the financial statements;(c) the nature and extent of government grants recognised in the financial statements; (d) an indication of other forms of government assistance from which the entity has directly benefited. and ‘e) _ unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.