APSC 1863 Lecture Notes - Lecture 2: Deferred Income, Income Statement, Current Liability
26 Oct 2017
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Government grants are assistance in the form of a transfer of resources (e. g. cash, assets, or assistance) in return for past or future compliance with conditions relating to an enterprise"s operating activities. Government refers to government, government agencies and similar bodies whether local, national or international. The standard does not deal with: tax allowances, government participation in the ownership of an entity, government grants covered by ias 41 agriculture. Grants should not be recognised in the income statement until: the conditions for receiving the grant have been complied with, and, there is reasonable assurance that the grant will be received. When these conditions are met, grants should be recognised in the income statement so as to match them with the expenditure towards which they are intended to contribute. Method one, where the grant is offset against the cost of the asset, is simpler to work out. The asset is included in the financial statements at its cost minus the grant.
