PAS 20

Question 1

The receipt of government assistance by an entity maybe significant for the preparation of financial statements for two reasons:

Answer 1

First, if resources have been transferred, appropriate method of accounting for the transfer must found.
secondly, it desirable to give an indication of the extent to which the entity has benefited from such assistance during the period.

Question 2

Government oGrants, including nonmonetary grants value, shall not bee recognize until there is reasonable assurance that:

Answer 2

A) the entity will comply with the conditions attaching to them b) the grants will be received

Question 3

Government Grants shall be recognized in ___________ on a systematic basis over the periods in which the entity recognizes as expense the related costs for which the grants are intended to compensate.

Answer 3

Profit or loss

Question 4

Two approaches for accounting government grants

Answer 4

Capital approach

income approach

Question 5

The approach to the accounting for government grants under which a government Grant is recognize outside profit or loss

Answer 5

Capital approach

Question 6

The apporach to accounting for government grants under which a grant is recognize in profit or loss over one or more periods.

Answer 6

Income approach

Question 7

The argument that supports the capital approach

Answer 7

A) Government grants are financing devices that should be dealt with as such in the statement of the financial position rather than he recognized in profit or loss to offset the items of expenses that they finance. Because no payment is expected, such grants should be recognized outside profit or loss.
B) it is inappropriate to recognize government grants in profit or loss, because they are not earned but represents an incentive provided by government without related costs.

Question 8

Arguments that support the income approach

Answer 8

A) Because government grants are receipts from a source other than shareholders, they should not be recognized directly in it equity but should recognized in profit or loss in appropriate periods.
B) Government grants are rarely gratuitous.
C) because income and other taxes are expenses, it is logical to do deal also with government grants, which are extension of fiscal policies, in profit or loss.

Question 9

Two methods of presentation in financial statements of grants related to assets

Answer 9

Deferred income

deducting the grant in arriving at carrying amount

Question 10

The following matters shall be disclose

Answer 10

A) The accounting policy adapted for government grants, including the methods of presentation adopted in the financial statements
B)The nature and extent of government grants recognized in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited
C) unfulfilled conditions or contingencies attaching to government assistance that has been recognize

Question 11

Accounting for government grants and disclosures of government assistance standard does not deal with:

Answer 11

A) special problems arising in accounting for government grants in financial statements reflecting the effect of changes in prices or incident our information of a similar nature
B)government Participation in the ownership of the entity
C) Government grants covered by IAS 41 agriculture
D) government assistance that is provided for an entity in the form of benefits that are available in determining taxable profit or tax loss, or are determined or limited on the basis of income tax liability