govt. grant. as 12
JERIT JOSE (24 Points)
12 November 2018
treatmeny of govt. grant of depreciable asset under method
2 Replies
CA Sunil Kumar
(Chartered Accountant)
(4524 Points)
Replied 12 November 2018
Two methods are prescribed for recognition of grants in form of grants for specific fixed assets:
Method 1 – The amount of grant is reduced from the gross amount of the asset to calculate book value. This signifies that the grant is being recognized in profit and loss account as a reduced charge of depreciation over the life of such asset.
Method 2 – The grants are treated as a deferred income in the financial statements. This income is recognized gradually in the profit and loss account over the useful life of an asset or say in the proportion of depreciation on such asset.
Method 1 – The amount of grant is reduced from the gross amount of the asset to calculate book value. This signifies that the grant is being recognized in profit and loss account as a reduced charge of depreciation over the life of such asset.
Method 2 – The grants are treated as a deferred income in the financial statements. This income is recognized gradually in the profit and loss account over the useful life of an asset or say in the proportion of depreciation on such asset.
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