(i)
Ind AS 20 deals with the other forms of
government assistance which do not fall within the definition of government
grants. It requires that an indication of other forms of government assistance
from which the entity has directly benefited should be disclosed in the
financial statements. However, AS 12 does not deal with such government assistance.
(ii)
AS
12 requires that in case the grant is in respect of non-depreciable assets, the
amount of the grant should be shown as capital reserve which is a part of
shareholders’ funds. It further requires that if a grant related to a
non-depreciable asset requires the fulfilment of certain obligations, the grant
should be credited to income over the same period over which the cost of
meeting such obligations is charged to income. AS 12 also gives an alternative
to treat such grants as a deduction from the cost of such asset.
As compared to the above, Ind AS 20, is based
on the principle that all government grants would normally have certain
obligations attached to them and these grants should be recognised as income
over the periods which bear the cost of meeting the obligation. It, therefore,
specifically prohibits recognition of grants directly in the shareholders’
funds.
(iii)
AS 12 recognises that some government grants
have the characteristics similar to those of promoters’ contribution. It
requires that such grants should be credited directly to capital reserve and
treated as a part of shareholders’ funds. Ind AS 20 does not recognise
government grants of the nature of promoters’ contribution. As stated at (ii)
above, Ind AS 20 is based on the principle that all government grants would
normally have certain obligations attached to them and it, accordingly,
requires all grants to be recognised as income over the periods which bear the
cost of meeting the obligation.
(iv)
AS 12 requires that government grants in the
form of non-monetary assets, given at a concessional rate, should be accounted
for on the basis of their acquisition cost. In case a non-monetary asset is
given free of cost, it should be recorded at a nominal value. Ind AS 20
requires to to value non-monetary grants at their fair value, since it results
into presentation of more relevant information and is conceptually superior as
compared to valuation at a nominal amount.
(v)
Existing
AS 12 gives an option to present the grants related to assets, including
non-monetary grants at fair value in the balance sheet either by setting up the
grant as deferred income or by deducting the grant from the gross value of
asset concerned in arriving at at its book value. Ind AS 20 requires
presentation of such grants in balance sheet only by setting up the grant as
deferred income. Thus, the option to present such grants by deduction of the
grant in arriving at at at its book value is not available under Ind AS 20
(v)
Ind AS 20 includes Appendix A which deals with
Government Assistance—No Specific Relation to Operating Activities
(vi) Ind AS 20 requires that loans received from a government that have a below-market rate of interest should be recognised and measured in accordance with Ind AS 39 (which requires all loans to be recognised at fair value, thus requiring interest to be imputed to loans with a below-market rate of interest) whereas AS 12 does not require so.
