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CA Final · Financial Reporting · Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance

Ind AS 20 defines government grants as 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 its operating activities. Which of the following is excluded from the meaning of 'government grants' under this definition?

Revenue from supplying goods to a government department at normal market prices is excluded, because Ind AS 20 excludes transactions with government that cannot be distinguished from the entity's normal trading transactions. The other options are transfers of resources made in return for compliance with operating conditions, so they qualify as government grants.

  1. AA cash subsidy paid to Sundaram Textiles Ltd for installing an effluent treatment plant, subject to conditions
  2. BFree transfer of land by a State government to Kaveri Auto Ltd on condition that it sets up a factory in a notified backward area
  3. CRevenue received by Himalaya Stationers Ltd for supplying files to a government department at normal market prices in the ordinary course of tradingCorrect
  4. DWaiver of a government loan taken by Narmada Fertilisers Ltd, subject to the entity meeting specified production conditions

Explanation

The definition excludes transactions with government that cannot be distinguished from the entity's normal trading transactions. Sales at market prices in the ordinary course are such transactions. The other three are transfers of resources in return for compliance with conditions relating to operating activities, so they are government grants.

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