Skip to content

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

Under AS 12, which of the following is a 'government grant'?

A government grant is assistance by government, in cash or kind, given to an enterprise for past or future compliance with certain conditions. Normal trading transactions with government and assistance that cannot reasonably be valued are excluded from the definition.

  1. AAssistance by government in cash or kind to an enterprise for past or future compliance with certain conditionsCorrect
  2. BA sale of goods by an enterprise to a government department at normal market prices
  3. CFree technical advice from a government agency whose value cannot reasonably be measured
  4. DIncome recognised on a receipts basis irrespective of related costs

Explanation

AS 12 defines government grants as assistance by government in cash or kind for past or future compliance with certain conditions. Transactions that cannot be distinguished from normal trading and forms of assistance that cannot reasonably be valued are excluded, so options 2 and 3 are wrong. Option 4 describes a recognition method, not a definition.

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