Page 2 - 14. COMPILER QB - INDAS 20

INDAS – 20 – AC
COUNTING FOR
GOVERNMENT GRANTS & DISCLOSURE OF

GOVT. ASSISTANCE

(TOTAL NO. OF QUESTIONS – 8)

INDEX

S.No. Particulars Page No.

1 RTP Questions 14.1

2 MTP Questions 14.4

3 Past Exam Questions 14.6

4 Newly Added Question by ICAI 14.8

RTPs QUESTIONS

Q1 (May 20 & MTP March 21 – 6 marks)

Rainbow Limited is carrying out various projects for which the company has either received government
financial assistance or is in the process of receiving the same. The company has received two grants of Rs
1,00,000 each, relating to the following ongoing research and development projects:
(i) The first grant relates to the “Clean river project” which involves research into the effect of various

chemical waste from the industrial area in Madhya Pradesh. However, no major steps have been completed
by Rainbow limited to commence this research as at 31st march, 20X2.
(ii) The second grant relates to the commercial development of a new equipment that can be used to
manufacture eco-friendly substitutes for existing plastic products. Rainbow Limited is confident about the
technical feasibility and financial viability of this new technology which will be available for sale in the

market by April 20X3.
(iii) In September 20X1, due to the floods near one of its factories, the entire production was lost and
Rainbow Limited had to shut down the factory for a period of 3 months. The State Government
announced a compensation package for all the manufacturing entities affected due to the floods. As per
the scheme, Rainbow Limited is entitled to a compensation based on the average of previous three
months’ sales figures prior to the floods, for which the company is required to submit an application form

on or before 30th June, 20X2 with necessary figures. The financial statements of Rainbow Limited are to
be adopted on 31st May, 20X2, by which date the claim form would not have been filed with the State
Government.
Suggest the accounting treatment of, if any, for the two grants received and the flood-related compensation

in the books of accounts of Rainbow Limited as on 31st March, 20X2.

14.1