IAS 20 Government Grants

What does IAS 20 cover?

Accounting for government grants and disclosure of government assistance.

What is a government grant?

Government support accounted for as a grant; treatment depends on its purpose.

What is government assistance?

Other government help, such as free advice, guarantees or special support.

What are the two main grant types?

Capital grants and revenue grants.

What is a capital grant?

A grant relating to an asset, such as help to buy equipment.

What is a revenue grant?

A grant relating to income or expenses, recognised in the relevant period(s).

What two capital-grant methods does IAS 20 permit?

Immediate deduction from the asset or deferred credit.

How does the immediate method treat a capital grant?

Deduct it from the asset cost and depreciate the net amount.

What happens to asset cost under the immediate method?

It decreases by the amount of the grant.

How is depreciation calculated under the immediate method?

Based on the asset cost after deducting the grant.

How does the deferred method initially present a capital grant?

As a deferred credit in liabilities.

How is a deferred capital grant recognised in the SOCI?

Released as income on the same basis as the asset is depreciated.

What is the meaning of SOCI?

Statement of Comprehensive Income.

What happens to a deferred grant balance over time?

It is released to the SOCI as the asset is depreciated.

Which capital-grant method do the lecture slides say Irish company law permits?

The deferred method only.

Does IAS 20 permit immediate deduction and deferral?

Yes. Both approaches are permitted by IAS 20.

When are revenue grants recognised?

In the periods to which they relate.

How is a single-period revenue grant treated?

Recognise it in the current SOCI.

How is a multiple-period revenue grant treated?

Recognise it in the SOCI across the relevant periods.

What allocation method can be used for revenue grants?

Straight-line or another more appropriate basis.

What does straight-line allocation mean for a grant?

Spread recognition evenly over the relevant periods.

What if government assistance cannot practically be valued?

Do not bring it into the financial statements.

Must assistance without a practical value still be disclosed?

Yes. Disclose at least its nature, extent and duration.

Name an example of government assistance involving advice.

Free marketing or technical advice.

Name an example of government assistance involving loans.

Loans at nil cost.

Name an example of government assistance involving guarantees.

Government provision of guarantees.

What policy can count as government assistance?

Government procurement policy.

How should a grant package be accounted for?

Apply the relevant rules to each capital grant, revenue grant and assistance.

What is a non-monetary government grant?

A grant of land or other resources rather than cash.

How are non-monetary grants usually measured under IAS 20?

At fair value.

What alternative measurement is permitted for non-monetary grants?

Record both the asset and the grant at a nominal amount.

How does the lecture describe accounting for repaid grants?

Reverse the original accounting entries.

What is reversed if an immediate-method grant is repaid?

The reduction in asset cost and the related depreciation reduction.

What is reversed if a deferred-method grant is repaid?

The SOCI entries and the balance of the deferred grant account.

What accounting-policy disclosure does IAS 20 require?

The accounting policy used for government grants.

What must be disclosed about grants recognised?

Their nature and extent.

What should be disclosed about other government assistance?

Other forms of government assistance received.

What must be disclosed about grant conditions?

Unfulfilled conditions and other related contingencies.

What is the capital-grant rule in the lecture for FRS 102 Section 24?

Do not immediately deduct capital grants from asset cost.

How does the lecture say FRS 102 capital grants are treated?

Defer them and write them off over the appropriate period.

Over which periods can FRS 102 capital grants be written off?

The conditional period or the asset’s useful life.

Exam check: grant buys equipment — what type is it?

Capital grant (asset-related).

Exam check: grant pays running costs — what type is it?

Revenue grant (income/expense-related).

Exam check: free technical advice cannot be valued — what happens?

Do not recognise a value; disclose nature, extent and duration.

Exam check: what is the key difference between capital and revenue grants?

Capital relates to assets; revenue relates to income or expenses.