Chapter 14 - Accounting for government grants and disclosure of government. The main contents of the chapter consist of mains parts: Related standards, IAS 20, current GAAP comparisons, looking ahead, end-of-chapter practice. | Lecture IFRS primer international GAAP basics Chapter 14 - Wiecek Young Accounting for Government Grants and Disclosure of Government Assistance IAS 20 Wiecek and Young IFRS Primer Chapter 14 Accounting for Government Grants and Disclosure of Government Assistance Related standards IAS 20 Current GAAP comparisons Looking ahead End-of-chapter practice 2 Related Standards IAS 41 Agriculture IAS 37 Provisions contingent liabilities and contingent assets 3 IAS 20 - Overview Objective and scope Accounting for government grants Government assistance Disclosure 4 IAS 20 Objective and Scope Government grant a form of government assistance a transfer from a government to an entity that requires compliance with certain conditions related to entity s operating activities. Government assistance government action to generate an economic benefit for entities that meet qualifying criteria. 5 IAS 20 Objective and Scope Excludes benefits provided by adjusting taxable profit or loss or that are determined on the basis of the income tax liability - such as investment tax credits income tax holidays accelerated tax depreciation methods and reduced income tax rates 6 IAS 20 Accounting for Government Grants Recognition and Measurement Recognize a government grant when there is reasonable assurance that 1. The grant will be received and 2. The entity will comply with the conditions attached to the grant 7 IAS 20 Accounting for Government Grants Two general approaches 1. Capital approach 2. Income approach Apply this one Grants from government are not equity financing they are non-shareholder-related increases in net assets and therefore items of income. 8 IAS 20 Accounting for Government Grants Income approach recognize government grants in profit or loss in the same periods that the related expenses are recognized If for acquisition of assets on the same basis as the depreciation on the assets If related directly to incurring specific expenditures on the same basis as the expenditures
