Indian Accounting Standard (Ind AS) 20 Summary
Indian Accounting Standard (Ind AS) 20, Accounting for Government Grants and Disclosure of Government Assistance shall be applied in accounting and disclosure of government grants and for disclosure of other forms of government assistance.
Government grants, including non-monetary grants at fair value, are recognised only when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received.
If government grant is in the form of a non-monetary asset, then both the asset and the grant are either recognised at the fair value of the non-monetary asset or at a nominal amount.
Unconditional government grants related to biological assets measured at fair value less cost to sell are recognised in profit or loss when they become receivable, conditional grants for such assets are recognised in profit or loss when the required conditions are met.
Government grants that relate to the acquisition of an asset, other than a biological asset measured at fair value less cost to sell, are recognised in profit or loss as the related asset is depreciated or amortised. In case of a non-depreciable assets, the related grants are recognised in profit or loss over the periods that bear the cost of meeting the obligations.
Other government grants are recognised in profit or loss when the entity recognises as expenses the related costs that the grants are intended to compensate.
A forgivable loan from government is treated as a government grant when there is a reasonable assurance that the entity will meet the terms for forgiveness of the loan.
Low-interest loans from government may include components that need to be treated as government grants.
Non-monetary government grants are either to be measured at fair value or at a nominal amount.
Government grants related to assets are presented in the balance sheet either as deferred income or by deducting the grant in arriving at the carrying amount of the asset.
Government grants related to income are presented separately in profit or loss or as deduction from the related expense.
Government grants that become repayable would be accounted for as a change in an accounting estimate.
Repayment of a government grant related to income would be applied first against any unamortised deferred credit recognised in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or when no deferred credit exists, the repayment would be recognised immediately in profit or loss.
Repayment of a grant related to an asset would be recognised by either:
– Reducing the deferred income balance by the amount repayable, or
– Increasing the carrying amount of the related asset, if the grant was previously deducted from the carrying amount of the asset. In this case, the cumulative additional depreciation on the new carrying amount of the asset would be recognised immediately in the statement of profit and loss.