Multiple choice

Directions: Choose the correct option for the given question.

Government grants related to income as per the Accounting Standard (AS)-12 should be

  1. presented as a credit in the statement of Profit and Loss.

  2. presented as a deferred income on the asset side of the balance sheet.

  3. presented as a capital grant on the liability side of balance sheet.

  4. presented both in the profit and loss statement and in the balance sheet.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AS-12 requires that government grants related to income be presented in both financial statements - as income in the P&L and separately in the balance sheet until realized. This dual presentation ensures transparency about the nature and timing of grant recognition. The standard distinguishes between revenue and capital grants.

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