Skip to content

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

Which statement about the disclosure required by AS 12 is correct?

AS 12 requires disclosure of the grant accounting policy and presentation methods, plus the nature and extent of grants recognised, including non-monetary assets given free of cost or at a concessional rate. Cash-only or threshold-based disclosure is not what the standard says.

  1. AOnly grants received in cash need be disclosed, since non-monetary grants have a nominal value
  2. BThe accounting policy, including presentation methods, and the nature and extent of grants recognised, including non-monetary assets given free or at a concessional rate, must be disclosedCorrect
  3. COnly the accounting policy needs to be disclosed, not the extent of grants
  4. DDisclosure is needed only for grants exceeding 10% of net profit

Explanation

AS 12 requires disclosure of the accounting policy adopted, including methods of presentation, and the nature and extent of grants recognised, expressly including non-monetary assets given at a concessional rate or free of cost. No materiality threshold of 10% appears in the text, and non-monetary grants are not excluded.

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