Skip to content

CMA Intermediate · Financial Accounting · Accounting for Government Grants (AS 12)

AS 12 regards how many alternative methods as acceptable for presenting, in the financial statements, grants related to specific fixed assets?

AS 12 recognises two acceptable alternative methods for presenting grants related to specific fixed assets. Under one, the grant is deducted from the asset's gross value; under the other, it is treated as deferred income. The enterprise may follow either, so exactly two methods are acceptable.

  1. AOne method only, deduction from the asset
  2. BTwo methods, regarded as acceptable alternativesCorrect
  3. CThree methods, depending on the size of the grant
  4. DNo method is prescribed; the enterprise may choose any

Explanation

Paragraph 8.2 of AS 12 states that two methods of presentation of grants (or appropriate portions) related to specific fixed assets are regarded as acceptable alternatives. One is deduction from the asset's gross value, the other is treatment as deferred income. So a single prescribed method or an unlimited choice is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Accounting for Government Grants (AS 12) shows your real accuracy, how long you take and where you lose marks.

Practise Accounting for Government Grants (AS 12)Free diagnostic mock

More Accounting for Government Grants (AS 12) questions