Government grants are financial aids provided by the government to support various activities and programs. When it comes to accounting for government grants, it is essential to follow the relevant accounting standards to ensure accurate and transparent financial reporting. In commerce and accountancy, the following accounting standards are important to study:


AS 12 provides guidance on accounting for government grants, including non-monetary grants, grants related to assets, and grants related to income. It outlines the recognition, measurement, and disclosure requirements for government grants, emphasizing the need to reflect the substance of the transaction. This standard ensures that government grants are appropriately accounted for and disclosed in financial statements.


AS 15 is relevant when government grants are received to meet employee benefit obligations. It provides guidance on recognizing and measuring employee benefits, including short-term and long-term benefits like salaries, pensions, and post-employment benefits. This standard ensures that the accounting treatment of government grants related to employee benefits aligns with the principles of recognizing and measuring such obligations.


AS 16 is applicable when government grants are received to finance assets that take a substantial period to get ready for their intended use. It provides guidance on the recognition, measurement, and disclosure of borrowing costs incurred in acquiring or constructing qualifying assets. This standard ensures that the accounting treatment of government grants related to borrowing costs is in line with the principles of recognizing and measuring such expenses.


AS 29 is relevant when government grants are received to compensate for expenses or losses incurred in the future or to fund future obligations. It provides guidance on recognizing and measuring provisions and contingent liabilities, ensuring that the accounting treatment of government grants related to such obligations is appropriately reflected in the financial statements.


Studying the accounting standards mentioned above is crucial for understanding how to account for government grants in commerce and accountancy. These standards provide guidance on recognizing, measuring, and disclosing government grants, ensuring accurate and transparent financial reporting. By adhering to these accounting standards, organizations can effectively manage and report their government grant-related transactions.