Grants

Question 1

When is grant income recognised?

Answer 1

when conditions of the grant will be met, not when cash is received

Question 2

What are the two accounting policied that can be chosen when a grant relates to an asset?

Answer 2

capital and income

Question 3

What is capital accounting policy?

Answer 3

recognise grant against cost of the asset
- when grant received Dr cash and Cr PPE
- future expenses reduced as depreciation will be lower

Question 4

What is income accounting policy?

Answer 4

recognised income over the period which the grant conditions are met
- when grant received Dr cash and Cr deferred income
- record over grant condition period Dr deferred income and Cr P&L