(Summary) Ind AS 20
Accounting for Government Grants
Disclosure of Government Assistance
This Standard guides in accounting for, and in the disclosure of, government grants and in the disclosure of other forms of government assistance.Government participation in the ownership of the entity, and grants covered by Ind AS 41 are not in the scope of this standard.
- Government Assistance
- Government Grants
- Fair Value
Government refers to government, government agencies and similar bodies whether local, national or international.
Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity. They exclude those forms of government assistance which cannot reasonably have a value placed upon them and transactions with government which cannot be distinguished from the normal trading transactions of the entity.
- Government grants, including non-monetary grants at fair value, shall not be recognised until there is reasonable assurance that:
- The entity will comply with the conditions attaching to them; and
- The grants will be received
- Receipt of a grant does not of itself provide conclusive evidence that the conditions attaching to the grant have been or will be fulfilled.
- The manner in which a grant is received does not affect the accounting method to be adopted in regard to the grant.
- Government grants shall be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.
- There are two broad approaches to the accounting for government grants: the capital approach, under which a grant is recognised outside profit or loss, and the income approach, under which a grant is recognised in profit or loss over one or more periods.
- A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs shall be recognised in profit or loss of the period in which it becomes receivable.
Government grants related to assets, including non-monetary grants at fair value, shall be presented in the balance sheet by setting up the grant as deferred income.
A government grant that becomes repayable shall be accounted for as a change in accounting estimate.
- Repayment of a grant related to income shall be applied first against any unamortised deferred credit recognised in respect of the grant.
- Certain forms of government assistance cannot reasonably have a value placed upon them and transactions with government which cannot be distinguished from the normal trading transactions of the entity.
- the accounting policy adopted for government grants, including the methods of presentation adopted in the financial statements;
- the nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited; and
- unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.