ICDS VII – Government Grants

Scope

Deals with the treatment of Government grants. (government grants includes subsidies, cash subsidies, cash incentives, duty drawbacks, waiver, concessions, reimbursements,etc.

Does not deal with:

(a)    Government assistance  other than in the form of government grants;

(b)    Government participation in the ownership of the enterprise.

Definitions

  • Government grants are assistance by Government in cash or kind to a person for past or future compliance with certain conditions. They exclude those forms of Government assistance which cannot have a value placed upon them and the transactions with government which cannot be distinguished from the normal trading transactions of the person.

Recognition & Treatment

ICDS 7_1

ICDS 7_2

Refund of the above grants to be added to the cost of the asset and depreciated prospectively

 

Refund of the above grants are to  be adjusted against any unamortised deferred credit. To the extent the amount refundable exceeds deferred  credit or when no such deferred credit exists, the amount shall be charged to the profit and loss account

 

 

Disclosures

Nature and extent of government grants :

Recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value of block of assets during the previous year

Recognised during the previous year as income

Not Recognised during the previous year by way of deduction from actual cost of the asset or assets or from the written down value of block of assets and reasons thereof; and

Not Recognised during the previous year as income and reasons thereof

 

Key difference with AS

      ICDS VII does not recognise Capital approach to recognise grant

ICDS explicitly states that recognition of grant shall not be delayed once the actual receipt has taken place

Grants relating to non depreciable assets are to be deducted from asset in AS but treated as income in ICDS

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