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AS -12
ACCOUNTING FOR
GOVERNMENT GRANTS
IPCC PAPER 5 ADVANCED ACCOUNTING
CHAPTER 2
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PREAMBLE
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NEED OF AS-12
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SCOPE
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EXCLUSIONS
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DEFINITION
Government Grant
Assistance by government in cash or kind
for past or future compliance of certain conditions.
Does not include grants which cannot be reasonably
measured.
Does not include transactions with government which
cannot be distinguished from normal trading transactions of
an enterprise
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Two approaches
Capital Approach
{ Grant treated as part of the shareholders fund }
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CAPITAL APPROACH
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EXAMPLE METHOD 1
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ANSWER METHOD 1
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EXAMPLE METHOD 2
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ANSWER METHOD 2
Particulars Amount Dr. Amount Cr.
Fixed Asset Account 50,00,000
To Bank Account 50,00,000
(Being Asset Purchased)
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INCOME APPROACH
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Capital
For Fixed Assets
Contribution
Recognized in P&L
over the period
Cash Kind Cash 1. as other
income
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EXAMPLE REFUND
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CHART REFUND
Asset Revenue
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RECOGNITION
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DISCLOSURE REQUIREMENTS
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