CMA Intermediate · Financial Accounting · Accounting for Government Grants (AS 12)
Sundaram Textiles Ltd was allotted a plot by a State government at a concessional price of ₹40 lakh, while its market value was ₹70 lakh. Following AS 12, at what value should the plot be recorded?
The plot is recorded at ₹40 lakh, the acquisition cost actually paid. AS 12 states that non-monetary assets received at concessional rates are usually accounted for at acquisition cost, not at market value or the concession amount.
- A₹70 lakh
- B₹30 lakh
- C₹40 lakhCorrect
- DNominal value of ₹1
Explanation
AS 12 says non-monetary assets given at concessional rates are usually accounted for at their acquisition cost. The cost actually paid is ₹40 lakh. ₹70 lakh is the fair value approach, and ₹30 lakh is merely the concession amount, which is not the cost.
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