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CA Inter AS 12 Accounting for Government Grants — practice questions

Explore 54 free AS 12 Accounting for Government Grants questions in CA Inter Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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AS 12 Accounting for Government Grants questions and exercises with answers

Showing questions 1–30 of 54.

In AS 12, government grants are assistance given in what form?Read the answer and worked solution →Which is NOT given in AS 12 as another name for a grant?Read the answer and worked solution →AS 12 does not deal with government participation in what?Read the answer and worked solution →Besides the capital approach, which approach does AS 12 describe?Read the answer and worked solution →Under the capital approach, a grant is treated as part of what?Read the answer and worked solution →Under the income approach, a grant is dealt with how?Read the answer and worked solution →Which argument supports the capital approach?Read the answer and worked solution →Which grants should be part of shareholders funds, per AS 12?Read the answer and worked solution →Booking grant income only on receipt breaches which assumption?Read the answer and worked solution →When are grants for specific expenses taken to income?Read the answer and worked solution →Grants are recognised when the enterprise will do what?Read the answer and worked solution →Receipt of a grant, by itself, shows what about its conditions?Read the answer and worked solution →Earned grant benefits are credited to income on what basis?Read the answer and worked solution →A contingency arising after a grant is recognised follows which standard?Read the answer and worked solution →A grant for immediate support to one enterprise is taken to income when?Read the answer and worked solution →A grant compensating an earlier period loss is recognised when?Read the answer and worked solution →Non-monetary assets given free of cost are recorded at what value?Read the answer and worked solution →A specific fixed asset grant requires the enterprise to do what?Read the answer and worked solution →How many presentation methods for fixed asset grants does AS 12 accept?Read the answer and worked solution →Deducting a grant from asset cost does what to depreciation?Read the answer and worked solution →A grant equal to the whole asset cost leaves the asset at what?Read the answer and worked solution →How is deferred grant income released to profit and loss?Read the answer and worked solution →Under the deferred income method, a grant on land with no obligations goes where?Read the answer and worked solution →A land grant with obligations is credited to income over which period?Read the answer and worked solution →Revenue grants may be shown under which heading?Read the answer and worked solution →Why may a revenue grant be deducted from the related expense?Read the answer and worked solution →Why do some prefer showing a revenue grant separately?Read the answer and worked solution →Which is true of capital reserve from a promoters contribution grant?Read the answer and worked solution →A grant that becomes refundable is treated as what item?Read the answer and worked solution →A revenue grant is refunded. What is the refund set against first?Read the answer and worked solution →

Worked practice questions

In AS 12, government grants are assistance given in what form?

  1. Tax rate cuts
  2. Cash or kind
  3. Soft loans
  4. Equity shares
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Correct answer: B. Cash or kind

The definition covers assistance by government in cash or in kind to an enterprise for compliance with conditions.

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Which is NOT given in AS 12 as another name for a grant?

  1. Dividends
  2. Duty drawbacks
  3. Cash incentives
  4. Subsidies
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Correct answer: A. Dividends

Subsidies, cash incentives and duty drawbacks are listed alternative names, but a dividend is a distribution to owners, not a grant.

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AS 12 does not deal with government participation in what?

  1. Ownership of the enterprise
  2. Audit of the enterprise
  3. Borrowing by the enterprise
  4. Taxation of the enterprise
Show answer and solution

Correct answer: A. Ownership of the enterprise

Government equity participation is a matter of ownership, which the Standard expressly leaves outside its scope.

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More Accounting topics

AS 3 Cash Flow StatementSchedule III Division I Financial StatementsAS 19 LeasesValuation of Inventories (AS 2)AS 22 Taxes on IncomeAS 28 Impairment of AssetsProperty, Plant and EquipmentAS 17 Segment Reporting