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CA Inter AS 12 Accounting for Government Grants — practice questions — page 2

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 31–54 of 54.

A revenue grant refund exceeds the deferred credit. The excess goes where?Read the answer and worked solution →After a refund raises asset book value, depreciation is provided how?Read the answer and worked solution →A refundable promoters contribution grant is reduced from what?Read the answer and worked solution →Which item must be disclosed about government grants?Read the answer and worked solution →What must be in place before a grant is recognised?Read the answer and worked solution →Which transactions are excluded from the grant definition?Read the answer and worked solution →Showing asset purchase and grant separately reveals what?Read the answer and worked solution →Why is accounting for grants significant for financial statements?Read the answer and worked solution →Revenue grants are recognised over periods to match what?Read the answer and worked solution →Which grants go to capital reserve under the main principles?Read the answer and worked solution →AS 12 refers to which standard for extraordinary items?Read the answer and worked solution →Which standard on accounting policies does AS 12 cite for accrual?Read the answer and worked solution →Machine costs Rs 10,00,000 with a Rs 2,00,000 grant. Book value on net method?Read the answer and worked solution →Cost Rs 10 lakh, grant Rs 2 lakh netted, 10-year SLM. Yearly depreciation?Read the answer and worked solution →Cost Rs 12 lakh, grant Rs 3 lakh, 5 years SLM. Annual grant income (deferred)?Read the answer and worked solution →Grant Rs 2 lakh, asset Rs 10 lakh, year-1 depreciation Rs 1.5 lakh. Grant income?Read the answer and worked solution →Rs 3 lakh grant, 5-year asset, SLM. Deferred income balance after 2 years?Read the answer and worked solution →Rs 6 lakh land grant carries obligation costs charged evenly over 5 years. Yearly credit?Read the answer and worked solution →Rs 4 lakh revenue grant offsets training cost incurred evenly over 4 years. Yearly income?Read the answer and worked solution →Revenue grant refund Rs 2 lakh; unamortised deferred credit Rs 1.5 lakh. P and L charge?Read the answer and worked solution →Asset book value Rs 6.4 lakh rises by a Rs 2 lakh grant refund; 8 years remain, SLM. Yearly depreciation?Read the answer and worked solution →Capital reserve of Rs 25 lakh from a promoters grant; Rs 5 lakh refunded. Reserve left?Read the answer and worked solution →Rs 2 lakh asset grant, deferred income, 8-year life. Yearly P and L income?Read the answer and worked solution →Rs 8 lakh grant on land, no obligations, deferred income method. Capital reserve credit?Read the answer and worked solution →

Worked practice questions

A revenue grant refund exceeds the deferred credit. The excess goes where?

  1. Deferred indefinitely
  2. Added to asset cost
  3. Credited to reserves
  4. Charged to profit and loss
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Correct answer: D. Charged to profit and loss

The balance beyond the deferred credit is charged immediately to the profit and loss statement.

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After a refund raises asset book value, depreciation is provided how?

  1. Prospectively
  2. Retrospectively
  3. Only on disposal
  4. Not at all
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Correct answer: A. Prospectively

Depreciation on the revised book value runs prospectively over the remaining useful life, with no catch-up for past years.

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A refundable promoters contribution grant is reduced from what?

  1. Current profit
  2. Deferred income
  3. Capital reserve
  4. Share capital
Show answer and solution

Correct answer: C. Capital reserve

Since such a grant was credited to capital reserve, the amount recoverable by government is deducted from that reserve.

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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