Flashcards IAS 20

Question 1

IAS 20 : what are the scope exceptions ?

Answer 1

1) accounting treatement of effect of changing prices in govt grants
2) govt assistance in form of tax holidays, investment tax credits, accelerated depreciation, reduced income tax rates.
3) govt participation in ownership
4) govt grants covered by IAS 41 Agriculture
5) govt benefits provided indirectly

(eg infrasturcuture in develop areas, general trading conditions)

6) govt benefits value not determinable/cannot be distinguished from normal trans

(free advices, provision of guarantees)

Question 2

IAS 20 : what are the conditions to recognise govt grants ?

Answer 2

1) reasonable assurance that entity will comply with grant conditions

related to receive the economic benefit (forgiveness, below market rate loan, etc)

2) reasonable assurance that grants will be received

Question 3

IAS 20 : how are grans recognised in profit + loss ?

Answer 3

1) systematic basis over periods where related expenses are incurred
2) immediately if related to past performance

Question 4

IAS 20 : what is the accounting treatement of govt grants ?

Answer 4

1) Asset related :
- cash / deferred liab or cash / PPE
- in cf stmt, grant is included in financing regardless presentation in BS
2) Income related :
- cash/deferred liab
3) Recognition in PL :
- in other income
- reduction in related expenses
4) No direct recognition in equity !

Question 5

IAS 20 : How is a govt grant that becomes repayable treated ?

Answer 5

1 As reduction of the related deferred liab

2 as an increase in PPE -with catchup adj of addl depreciation

3 excess, a change in accounting estimate per IAS 8

Question 6

IAS 20 : disclosures ?

Answer 6

1) adopted policies
2) nature + extent + forms of grant
3) unfulfilled conditions + contingencies for recognised grants

Question 7

IAS 20 : Objective

Answer 7

Prescribe accounting treatment and disclosure of govt grants + assistants