IAS 20 Flashcards
Recognise grant when?
Entity complies with conditions attached to the grant
Entity actually receive grant
How should grants be recognised?
According to deferred income approach
What is deferred income approach?
Spreads income over period in which related expenditure is recognised
If grant used to buy depreciating asset?
Grant is spread over same life and same method
Purchase of depreciating asset?
A capital grant
What is deferred income?
Money that a business receives in advance for goods or services that it has not yet delivered
Calculated as: Grant received - release of grant
How is deferred income classified?
As a liability. Can be non-current or current
How are grants relating to income shown?
In P&L either separately or as part of “other income”
How are government grants presented in SFP?
As deferred income then released to SPL over useful life of asset
Deducting grant in calculating carrying amount of asset
Deferred income double entry?
Debit: Other income
Credit: Deferred income
How are repayments of grants relating to assets recorded by?
Reducing the deferred income balance
Increasing carrying amount of the asset
Initial account for government grant?
Full grant received - release for the year
Debit: Other income
Credit: Deferred income
Total balance for deferred income at year end?
Grant received - release for this year
Release for year calculation?
Amonut received by grant / useful life of asset
