Indian Accounting Standard (Ind AS) 20 : Accounting for Government Grants and Disclosure of Government Assistance
Scope
This Standard shall be applied in accounting for, and in the disclosure of, government grants and in the disclosure of other forms of government assistance.
This Standard does not deal with:
the special problems arising in accounting for government grants in financial statements reflecting the effects of changing prices or in supplementary information of a similar nature.
government assistance that is provided for an entity in the form of benefits that are available in determining taxable profit or tax loss, or are determined or limited on the basis of income tax liability. Examples of such benefits are income tax holidays, investment tax credits, accelerated depreciation.
government participation in the ownership of the entity.
government grants covered by Ind AS, Agriculture1.
Footnote:
1 This Standard is under formulation.
Definitions
The following terms are used in this Standard with the meanings specified:
Government refers to government, government agencies and similar bodies whether local, national or international.
Government assistance is action by government designed to provide an economic benefit specific to an entity or range of entities qualifying under certain criteria. Government assistance for the purpose of this Standard does not include benefits provided only indirectly through action affecting general trading conditions, such as the provision of infrastructure in development areas or the imposition of trading constraints on competitors.
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 entity1.
Grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. Subsidiary conditions may also be attached restricting the type or location of the assets or the periods during which they are to be acquired or held.
Grants related to income are government grants other than those related to assets.
Forgivable loans are loans which the lender undertakes to waive repayment of under certain prescribed conditions.
Fair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arms length transaction.
Government assistance takes many forms varying both in the nature of the assistance given and in the conditions which are usually attached to it. The purpose of the assistance may be to encourage an entity to embark on a course of action which it would not normally have taken if the assistance was not provided.
The receipt of government assistance by an entity may be significant for the preparation of the financial statements for two reasons. Firstly, if resources have been transferred, an appropriate method of accounting for the transfer must be found. Secondly, it is desirable to give an indication of the extent to which the entity has benefited from such assistance during the reporting period. This facilitates comparison of an entitys financial statements with those of prior periods and with those of other entities.
Government grants are sometimes called by other names such as subsidies, subventions, or premiums.
Footnote:
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See Appendix A HYPERLINK "http://eifrs.iasb.org/eifrs/stdcontent/2009_Bound_Volume/SIC10o_1998-01-01_en.html#SL152516"Government AssistanceNo Specific Relation to Operating Activities
Government grants
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.
A government grant is not recognised until there is reasonable assurance that the entity will comply with the conditions attaching to it, and that the grant will be...
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