Government Grants PAS 20

Question 1

PAS 20 Par. 12, provides that government grants are recognized as income over the periods necessary to match them with the related costs which are intented to compensate on a systematic basis

Answer 1

True. So dapat may fraction of costs. To allocatr the Ggrant

Question 2

PAS 20
What are the two classification of government grant?

Answer 2

Grant Related to Asset - Primary condition is that an entity qualifying for the grant should purchase, construct, or otherwise acquire longterm asset.

Grant Related to Income - Residual Definition

Question 3

PAS 20
What are the rules for the recognition as income?

Answer 3

1. Grant in recognition of specific expenses shall be recognized as income over the period of related expense
2. Grant related to Depreciable Asset shall be recognized as income over the periods and in proportion tho the depreciation of the related asset (useful life)
3. Grant related to Non Depreciable Asset requiring fulfillment of certain conditions shall be recognized as income over the periods which bear the cost of meeting the obligation
4. Grant that becomes receivable as compensationfor expenses or losses ALREADY INCURRED or for the purpose of giving immediate financial support to the entity WITH NO FURTHER RELATED COSTS shall be recognized as income of the period in which it becomes receivable.

Question 4

PAS 20
Two ways of presentation of Gov Grant Related to Asset:

Answer 4

BS Presentation
Gross Method - Setting Deferred Income

Net Method - Deducting the grant in arriving at the Carrying Amount of the asset. The grant is deducted from the CA of the related asset.

P/L Presentation
Gross Method - Other Income

Net Method - Deducted from Depreciation

Question 5

PAS 20
Repayment is under change in?

Answer 5

Accounting Estimate

Question 6

PAS20
Give examples of Gov Grant/ Assistance

Answer 6

1. Free Technical or Marketing Advice
2. Provision of Guarantee
3. Government procurement policy that is responsible for a portion of the entity’s sale
4. Tax benefits

Question 7

PAS 20
Not Consifered as Government Assistance?

Answer 7

1. Infrastracture in development areas (improvement to general transport and communication network)
2. Imposition of trading constraints on competitors
3. Improved facilities (irrigation for the benefits of entire local community)