GOVERNMENT GRANT GROSS METHOD

-setting up the grant as deferred income (liability)

PAS 20 -account title involved: deferred income, asset

a.k.a “subsidies”, “subventions”, “premiums” NET METHOD

-SPECIFIC FOR THE ENTITY not for the public - account title involved:, asset net of deferred
-apply MATCHING PRINCIPLE income
-deducting the grant to arrive at carrying amount
Recognition: @FAIR VALUE of the asset

Provided that: PRESENTATION related to Income

-entity will comply with conditions attaching to
them
-grants will be received

Initial Measurement:
1. Separately on under a general heading-
Generally: @fair value Other Income
2. They are deducted in reporting the
MONETARY NONMONETARY related expense
Cash-at face value at fair value plus
Receivable-at fair direct costs FORGIVABLE LOAN
value -income immediately
Forgivable Loan-at
carrying amount Loan Payable below market rate
Loan with zero -PFRS 9 applies
interest or below -Initial Measurement less Proceeds
market interest rate
Loan-discount on loan REPAYMENT OF GRANTS
payable -conditions of receipt have not been met, shall be
accounted for as a CHANGE IN ACCOUNTING
CLASSIFICATIONS OF GRANT ESTIMATE thus PROSPECTIVELY

1. Related to asset
2. Related to income-recognized in P and L
immediately

GRANTS RELATED TO ASSET

-grants qualifying the entity to construct,
purchase or otherwise acquire a long term-asset Approach 1:

e.g –cash received from entity to build building

-land received from government

PRESENTATION related to Asset

1. GROSS METHOD
2. NET METHOD

1
Approach 2: