Government Assistance

Question 1

Government grant

Answer 1

• assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity (includes forgivable loans)

Question 2

Recognized when reasonable assurance of

Answer 2

1) the entity will comply with grant conditions
2) the grant will be received

Question 3

If grant received prior to conditions being met

Answer 3

• recognized deferred government grant until conditions met

Question 4

If conditions met but grant not yet received

Answer 4

• recognize the government grant receivable

Question 5

Government grant with favorable interest terms

Answer 5

• recognize a benefit equal to proceeds of the loan less the discounted value using the effective interest rate method and account for benefit as government grant

Question 6

Grants related to income

Answer 6

• provides resources to cover expenses and is recognized as expenses are incurred
• presented as: 1) separately as “other income” , 2) deducted from related expense

Question 7

Grants related to assets

Answer 7

• provides resources to cover purchase of assets and recognized as income on a systemic basis, in line with assets depreciation
• presented as: 1) deferred income and brought into income as depreciation is incurred over useful life , 2) deducted from assets carrying amount

Question 8

IFRS disclosures & Differences

Answer 8

• method of presentation
• nature and extent of amounts recognized and benefits received
• unfilled conditions and outstanding contingencies
• Differences: IFRS non-monetary grants can be recognized at FV or nominal amount (ASPE = FV only)