Valuation of inventory when govt grant availed

653 views 1 replies

Dear All,

One of our clients, a Pvt ltd company has received Govt grant for the purpose of manufacturing medical equipments. The company used the total grant for the purchase of components for the purpose. As per AS 12, total amount spent by the company is credited to P&L under other income. As on 31.03.2015, the company has finished one equipment and three more are in semi finished condition. None of the equipments were sold.  My question is that while valuing inventory, whether we have to deduct grant from the purchase cost. Terms and conditions related to the grant are met by company.

Kindly advise.

Thanks in advance,

Vimal

 

 

Replies (1)

Dear Vimal,

  • By reading your points it looks like company has got and utilized grant for the sake revenue expenditure. ie they are going to sold teh equipments those are financed from Govt grant
  • So, by referring As-12 there are two options:-
    • Charge whole grant to PL in the year of receipt because whole grant is taxable
    • Reduce the cost of inventory ( it looks more appropriate in your case) 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
20 June 2026
Assistant Accounts Manager

Fintax Professionals

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
24 June 2026
Senior Account (VA Client Operations)

Karbon Business

Bengaluru

CA Inter

View Details
Company
ARTICLESHIP 24 June 2026
ARTICLE ASSISTANT

BHUPINDER SHAH AND COMPANY

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 18 June 2026
Article Assistance

RB KESHRI & CO.

Mumbai

CA Inter

View Details
Company
12 June 2026
Accounts & Taxation Executive

Winshine Financial Services

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
2 posts Article assistant and Articleship completed students

Chirag N Shah & Associates

Mumbai

CA Inter

View Details