IAS 20 - Government Grants Flashcards
1
Q
What are the general principles of IAS 20?
A
Prudence - grants should not be recognised until the conditions for receipt have been complied with and reasonable assurance it will be received.
Accruals - grant should be matched with expenditure towards which they were intended to contribute.
2
Q
How do we account for capital grants (related to assets)?
A
a) Set up the grant as a deferred income and recognise income on a systematic basis over the useful life of the asset.
b) Deduct the grant from the cost of the asset and recognise as part of the depreciation charge.
3
Q
How do we account for revenue grants (related to income)?
A
a) Present as a credit in the P/L (income)
b) Present as a deduction from the related expense
