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

Kaveri Agro Ltd. receives a grant from the Central Government for a plant. The grant is given in return for compliance with conditions relating to the operating activities of the company in future years. In deciding whether the receipt is a 'government grant' under Ind AS 20, which feature is essential?

The essential feature is a transfer of resources from government to the entity in return for past or future compliance with certain conditions relating to its operating activities. Transactions indistinguishable from normal trading and assistance that cannot reasonably be valued are excluded from this definition.

  1. AA transfer of resources to the entity in return for past or future compliance with certain conditions relating to operating activitiesCorrect
  2. BThe assistance must always be in the form of non-monetary assets
  3. CThe assistance must be repaid in full after the conditions are met
  4. DThe transfer must be indistinguishable from normal trading transactions with government

Explanation

The definition requires a transfer of resources in return for past or future compliance with conditions relating to operating activities. Transactions indistinguishable from normal trading are specifically excluded, so that option is wrong. Nothing in the definition requires repayment or restricts grants to non-monetary assets.

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