Government Grants Flashcards
PAS 20, paragraph 3, defines ____ as assistance by government in the form of transfer of resources to an entity in return for part or future compliance with certain conditions relating to the operating activities of the entity
Government grant
True or false. Government grant including nonmonetary grant at fair value shall be recognised when there is reasonable assurance that
A. An entity will comply with the conditions attaching to the grant
B. The grant will be received
True
What are the 2 classifications of grant
Grant related to asset, grant related to income
Grant whose primary condition is that an entity qualifying for the grant shall purchase, construct or otherwise acquire long-term asset.
Grant related to asse
Government grant in recognition of specific cost is recognized income
a. Over the same period as the relevant expense
b. Immediately
A
Government grant related to depreciable asset is usually recognized as income
A. Immediately
B. Over the useful life of asset using straight line
C. Over useful life of the asset and in proportion to the depreciation of the asset
C
A government grant that becomes receivable as compensation for expenses or losses already incurred should be recognized as Income
A. When received
B. Of the period in which it becomes receivable
C. Over a maximum of 5 years using straight line
B
In the case of grant related to an asset, which of the following accounting treatment is prescribed
A. Record the grant income in the first year
B. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of the asset
C. Disclose only
B
In case of grant related to income, which of the following accounting treatment is prescribed
A. Credit the grant to equity
B. Present the grant as other income or as a separate line item or deduct it from related expenses.
C. Credit the grant ti retained earnings
