Accounting of Grant Received From a Shareholder Acting in the Capacity of Government Under Ind AS Framework
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- Last Updated on 7 March, 2025
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The issue in this document pertains to the accounting treatment of grants received from a shareholder acting in the capacity of the government under the Ind AS framework. The company receives grants from the Oil Industry Development Board (OIDB) for pre-project activities, categorized as revenue in nature under Operations & Maintenance (O&M) expenses. The company follows an accrual basis of accounting, recognizing the grant as income in the Statement of Profit and Loss based on expenditure incurred, regardless of actual receipt. However, there is uncertainty regarding whether this treatment aligns with Ind AS 20, which governs government grants. The key question is whether the grant should be recognized as income on an accrual basis or upon actual receipt. The Expert Advisory Committee (EAC) analyzed the issue and assessed whether these grants should be classified as income and how they should be presented in the financial statements.
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